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Reverse Mortgages

A reverse mortgage is a special type of home equity loan that allows you to receive cash against the value of your home without selling it.

For most reverse mortgages:

  • You can choose to receive a lump-sum payment, a monthly payment, or a line of credit
  • There are no restrictions on how you use the remainder of the money
  • You continue to live in the home and you retain title and ownership of it
  • You are also still responsible for taxes, hazard insurance, and home repairs
  • However, you do not have to repay the loan as long as you continue to live in the home.
    • Instead, the amount you owe, based on loan payouts and interest on the loan, becomes due when you or the last borrower, usually the last remaining spouse, dies, sells, or permanently moves out of the home

To qualify for a reverse mortgage:

  • You must be age 62 and older
  • Unlike a traditional mortgage, you do not have to provide an income or credit history to get the loan
  • The home must be your primary residence

How to apply:

  • You must meet with an approved reverse mortgage counselor before you can start the loan process. These counselors can help you decide whether a reverse mortgage is right for you.

Important considerations:

  • You must use the funds you receive to pay off any existing mortgages or other debt against your home and to make required home repairs
  • As long as you spend the payments you receive in the month that you receive them, the money is not taxable and does not count towards income or affect Social Security or Medicare benefits
  • Does not count as income for Medicaid eligibility
  • Once you have a reverse mortgage, it is very difficult to borrow any more against your home. But you can refinance a reverse mortgage if the house increases significantly in value.
  • If your heirs want to keep your home, they can repay the reverse mortgage. They can also keep the difference if the home’s sale price is greater than the reverse mortgage loan balance when they repay the loan.