Reverse Mortgages

Do I still own my home with a reverse mortgage?

Yes, absolutely. You retain full ownership and title to your home with a reverse mortgage. The lender places a lien on the property, just like a traditional mortgage, but you remain the homeowner. You can live in the home as long as you wish, provided you maintain the property, pay property taxes, and keep homeowners insurance current.

How much money can I receive from a reverse mortgage?

The amount depends on your age, the appraised value of your home, current interest rates, and the type of reverse mortgage. Generally, older borrowers with more valuable homes and lower existing mortgages can access more funds. An HECM calculator can provide an estimate, but your loan officer can give you exact figures based on your situation.

What happens to the loan when I pass away or move out?

When the last borrower permanently leaves the home, the loan becomes due. Your heirs have options: they can sell the home and keep any remaining equity after repaying the loan, refinance the reverse mortgage into a traditional mortgage, or walk away if the loan balance exceeds the home value. FHA-insured HECMs are non-recourse loans, meaning neither you nor your heirs will ever owe more than the home is worth.

Are reverse mortgage proceeds taxable?

No. Reverse mortgage proceeds are considered loan advances, not income, and are generally not subject to federal income tax. However, you should consult a tax advisor to understand how a reverse mortgage may affect your specific tax situation, including potential impacts on means-tested benefits like Medicaid.

Can I get a reverse mortgage if I still have a mortgage balance?

Yes. You can use a reverse mortgage to pay off your existing mortgage. In fact, this is one of the most common uses. The reverse mortgage must be the primary lien on the property, so any existing mortgage balance is paid off first from the reverse mortgage proceeds, and the remaining funds are available to you.