Reverse Mortgage Fact Sheet


What is a reverse mortgage?

  • A special loan that lets borrowers like you (age 62+)
  • Convert part of their home equity into cash
  • Without having to sell the home or make monthly payments

What can I use the money for?

  • Pay off existing mortgage
  • Repairs and improvements
  • Medical expenses
  • Normal living expenses
  • Anything else you want, no restrictions

Do I need good credit to get a reverse mortgage?

  • Your credit score is NOT a factor
  • NO minimum income requirements

How do I qualify to get a reverse mortgage?

  • Age 62 or older
  • Own the home
  • Live in it as your primary residence
  • Have a low mortgage balance or a mortgage-free home

Where do I get a reverse mortgage?

  • Proprietary reverse mortgage through private companies
  • FHA insured home equity conversion mortgage (HECM)

What are the major differences between the two types?

  • Required counseling vs optional
  • Loan limits
  • Payment options
  • Fees

Can I lose my house if I don’t make the mortgage payments?

  • No payments are required
  • Must live there, keep it in good repair, pay the insurance and taxes

If I get a reverse mortgage, does the bank own my house? Can I sell it?

  • You retain the title to your home and can sell whenever you choose
  • Loan is due when you sell, die, or move out
  • You (or your heirs) never owe more than the value of the house when sold

How much does it cost to get a reverse mortgage?

The costs vary and can include:

  • Origination fee
  • Loan closing costs (appraisal, title work, etc.)
  • Loan servicing fee
  • MIP (mortgage insurance payment)
    NINJA TIP

    Many of these fees have limits set by HUD and some banks don’t charge all the fees that are allowed, so it pays to ask various lenders what THEIR fees will be.  The costs must be disclosed to you in advance.  The closing costs can be financed.

How much money can I get from a reverse mortgage?

  • Depends upon the value of your home
  • Current interest rate
  • Your age
  • Fixed rate or variable interest loan
NINJA TIP

If you choose the variable interest rate loan, you’ll have several options for receiving the money (lump sum, payments over the remainder of your life, as a line of credit). The lender will explain all the details before you fill out an application.

Will I be taxed on the payments I get from the reverse mortgage?

No, the payments you receive are loan proceeds, not income.

Be sure to consult with your CPA or professional tax preparer for details.

Where can I get more information?

Laws and regulations governing reverse mortgages are subject to change, so be sure to check these web sites for current information.

  • HUD http://www.hud.gov/offices/hsg/sfh/hecm/hecmhome.cfm
  • AARP http://www.aarp.org/money/credit-loans-debt/reverse_mortgages/
  • FTC http://www.ftc.gov/bcp/edu/pubs/consumer/homes/rea13.shtm
  • NCOA http://www.ncoa.org/independence-dignity/home-equity.html