Is a Reverse Mortgage Right for You?

A Reverse Mortgage is a government-insured mortgage commonly known as a home equity conversion mortgage (HECM). It’s a program designed for homeowners over 62 that allows you to access your home’s equity like cash but instead of making payments, you receive income.


There are pros and cons to a Reverse Mortgage… just like most things in life.

Reverse Mortgage Benefits

Income and credit are not factors – Your age and the amount of home equity determine how much income you’ll get.

You don’t make a mortgage payment as long as you live in your home.

Insured by FHA, and available in adjustable and fixed rates.

Reverse Mortgage Negatives

Loan limit of up to $625,500 for your Reverse Mortgage,.
Reverse mortgage are typically more expensive than ordinary mortgages.

NOTE: If the deed to your home has only one spouse’s name on it, then add the other spouse to the deed.  A reverse mortgage is repaid when the last person on the deed moves out of the property permanently or passes away.  Which means the reverse mortgage would become due if the deeded spouse died or left the property even though the other spouse is still living in the house.


One Reverse Mortgage

Reverse Mortgage Eligibility

To be eligible for a reverse mortgage a borrower must be 62 or older, own their home without a mortgage (or have a low loan balance), and have no other liens against the home.

The borrower continues to be responsible for property taxes, homeowners insurance, and upkeep of the home; failure to do so can result in foreclosure.

How do you receive Reverse Mortgage Payments?

There are five options available:

  1. Tenure – equal monthly payments as long as at least one borrower lives and continues to occupy the property as a principal residence.
  2. Term – equal monthly payments for a fixed period of months selected.
  3. Line of Credit – unscheduled payments or installments, at times and in amounts of your choosing until the line of credit is exhausted.
  4. Modified Tenure – combination of line of credit with monthly payments for as long as you remain in your home.
  5. Modified Term – combination of line of credit plus monthly payments for a fixed period of months selected by the borrower.

Alternatives to a Reverse Mortgage

Because reverse mortgages can be complicated and expensive, they are not an answer to every 62+ year old’s situation. You might want to consider other strategies before committing:

  • Take out a home equity loan
  • Decrease expenses by moving into a smaller home or a condo.. or even an apartment
  • Seek property tax credit or abatement based with your senior status

money for reverse mortgage houseNOTE: We are not experts at SmallHouseLife.com. Do not use the the information in this article to make a decision about Reverse Mortgages. Consult with a professional first! We’re affiliates to some of the links found on this page.

Some of the information found in this article was obtained from occc.state.tx.us and hud.gov

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