Reverse Mortgage Myths & Facts

Myth: The lender owns your home.
Fact: With a reverse mortgage, the homeowner generally retains title and ownership of the home. You must continue meeting the loan’s requirements, including property taxes, homeowners insurance, maintenance, and occupancy obligations.

Myth: You can never make mortgage payments.
Fact: A reverse mortgage generally does not require traditional monthly principal and interest payments. However, borrowers may typically make voluntary payments toward the loan balance if they choose, subject to the loan terms.

Myth: You lose your home when you get a reverse mortgage.
Fact: A reverse mortgage does not automatically take your home away. The loan generally becomes due when a maturity event occurs, such as selling the home or permanently moving out, according to the loan terms.

Myth: Reverse mortgages are only for people in financial trouble.
Fact: Eligible homeowners may use reverse mortgages for various financial goals, including accessing home equity, supplementing retirement resources, managing existing mortgage debt, or creating additional financial flexibility.

Myth: You can spend the money only on certain expenses.
Fact: Depending on the reverse mortgage program and applicable requirements, proceeds can generally be used for many legitimate financial purposes. Borrowers should discuss their intended use and specific program terms with their loan professional.

Myth: Your heirs automatically inherit the reverse mortgage debt personally.
Fact: Reverse mortgage repayment is generally handled through the estate or the sale of the property when the loan becomes due. Specific protections and obligations depend on the reverse mortgage program and loan terms.

Myth: Reverse mortgages are free because you do not make monthly payments.
Fact: Reverse mortgages have costs, which may include interest, closing costs, mortgage insurance for applicable programs, and other fees. These costs can increase the loan balance over time.

Myth: You stop paying property taxes and homeowners insurance.
Fact: Homeowners remain responsible for required property taxes, homeowners insurance, property maintenance, and other applicable obligations. Failing to meet these responsibilities can affect the loan.

Myth: You can borrow the entire value of your home.
Fact: A reverse mortgage generally allows access to only a portion of the home’s value. The available amount depends on factors such as the borrower’s age, property value, existing liens, and the specific reverse mortgage program.

Myth: A reverse mortgage is the same as a traditional home equity loan.
Fact: Reverse mortgages have a different structure from traditional home equity loans. They are specifically designed to allow eligible homeowners to access home equity without the same traditional monthly principal and interest payment structure.