Reverse Mortgage Loans

Yes. Title stays in your name. You continue to own the home and you remain responsible for property taxes, homeowners insurance, any flood insurance, homeowners association dues, and keeping the home in good repair.

The loan becomes due and payable when the last borrower dies, sells the home, or transfers title. It also becomes due if the home stops being your principal residence. Under Home Equity Conversion Mortgage rules that includes being away from the home for more than 12 consecutive months for health reasons, such as a stay in a hospital, rehabilitation center, nursing home or assisted living facility, when no co-borrower is living there. Extended absence for non-medical reasons, generally more than six months, can also trigger repayment.

Yes, in specific circumstances, and this is the part every borrower should understand before applying. A reverse mortgage can go into default and lead to foreclosure if you fall behind on property taxes, homeowners insurance, flood insurance or homeowners association dues, if you do not keep the home in good repair, or if the home stops being your principal residence. Required counseling exists in part so that every borrower hears this before closing.

A Home Equity Conversion Mortgage is a non-recourse loan, which means the lender can only look to the property for repayment and cannot pursue you or your estate for a shortfall. What your heirs pay depends on what they decide to do. If they want to keep the home, they repay either the full loan balance or 95 percent of the home’s appraised value, whichever is less. If they sell the home and it is worth more than the balance, they repay the balance and keep what is left. If they sell and the home is worth less than the balance, Federal Housing Administration insurance covers the shortfall and your heirs do not owe the difference.

Yes. Interest and fees are added to the balance each month, so the amount owed goes up rather than down, and your equity in the home goes down over time. How quickly depends on the interest rate, how much you draw, and how long the loan is outstanding.

Reverse mortgage funds are loan advances, not income, so they generally do not affect Social Security or Medicare. Needs based programs work differently. Money you keep past the month you receive it can count as a resource and may affect eligibility for programs such as Medicaid and Supplemental Security Income. Your counselor approved by the U.S. Department of Housing and Urban Development is required to cover this, and a benefits counselor can review your specific situation.

Yes. Before a Home Equity Conversion Mortgage can proceed, you must complete a session with a counselor approved by the U.S. Department of Housing and Urban Development. The session covers your eligibility, the financial effects of the loan, the effect on public benefits, and the alternatives. You can find an approved counselor at 1-800-569-4287. We encourage you to bring adult children or advisors into that conversation.

Home Equity Conversion Mortgages are available to homeowners aged 62 and older who occupy the home as their principal residence. Other requirements apply, including a financial assessment of your ability to keep up with property charges.

Start with a conversation, not an application. We will walk through whether a reverse mortgage may fit your situation, what it would cost you in equity over time, and what the alternatives look like. TPRG Capital is a mortgage broker. We are not a lender, and we are not affiliated with any government agency.