Reverse mortgage questions people actually ask

At today's rates, roughly a third of your home's value at 62, about 40% at 70, and past half by the mid-eighties — before any existing mortgage and closing costs come out. The calculator will give you a range in about thirty seconds.

No monthly mortgage payment is required for as long as you live in the home and keep up with property taxes, homeowners insurance and maintenance. You may make voluntary payments at any time with no penalty, and some borrowers pay the interest monthly specifically to keep the balance from growing.

Three, and they are real. It is expensive upfront — $15,000 to $25,000 in costs. The balance compounds, so equity shrinks over time. And you can default by failing to pay taxes or insurance, which can cost you the house. None of these are hidden, and all three are survivable if the loan fits your situation. They are fatal if it does not.

Loan proceeds are borrowed money, not income, so they are generally not taxable and do not affect Social Security or Medicare. Interest is generally only deductible when it is actually paid, which for most borrowers means at the end of the loan, and deductibility is capped. Confirm the specifics with your tax adviser — not with a loan officer.

It can. Those are needs-based programs that test your assets, and proceeds sitting in your account at month end can count against you. Social Security and Medicare are unaffected. The usual approach is to draw only what you will spend within the month. Speak to a benefits specialist or an elder law attorney before you apply.

There is no minimum. What HUD requires is a financial assessment: a review of whether you have been paying property taxes and homeowners insurance on time, generally over the last two years, and whether enough income remains each month to run the household. Past credit trouble with a documented explanation is frequently fine. If the assessment raises concerns, the usual outcome is a set-aside from your proceeds to cover taxes and insurance, not a decline.

They cannot be a borrower, but they should be listed as an eligible non-borrowing spouse. Two things follow: the loan is calculated on their younger age, which reduces the proceeds; and they are protected, able to remain in the home for life after the borrowing spouse dies, provided taxes, insurance and upkeep are maintained. This has to be handled correctly at application — it cannot be corrected later. If anyone suggests leaving them off to get a bigger loan, walk away.

If the project is FHA-approved, yes. If it is not, there is a single-unit approval process that can sometimes be completed during your file, but it takes time and is not guaranteed. Worth checking before anyone orders an appraisal.

Often, if it meets FHA standards: built after June 1976, permanently affixed to a foundation, titled as real property rather than a vehicle, and on land you own. Homes in leased-land parks generally do not qualify.

Not necessarily — it depends entirely on your age and your home's value. The existing mortgage is paid off at closing from the proceeds, so the question is whether your principal limit covers it plus closing costs. Most borrowers still have a mortgage; eliminating it is usually the whole point. Run the numbers and you will know in a minute.

The loan becomes due once the last borrower has not lived in the home as a principal residence for twelve consecutive months. Hospital stays, rehab, and temporary absences do not count. If the move becomes permanent, the home is sold, the balance is paid from the proceeds, and anything left goes to you or your estate. If a spouse or eligible non-borrowing spouse still lives there, nothing changes.

Any time, no penalty. You pay the balance from the sale proceeds and keep the rest, exactly as with a normal mortgage.

Generally yes, as long as the home remains your principal residence. Renting the whole property while you live elsewhere is not permitted and is a default. Check your loan documents, and ask before you list anything.

Nothing changes for you. You stay in the home, no payment is demanded, and tenure payments keep arriving if that is how you structured it. When the loan eventually ends, FHA insurance covers the shortfall. Neither you nor your heirs owe the difference. This is what the insurance premium buys.

No. This is a genuine and underappreciated advantage over a bank HELOC, which can be frozen or reduced at the lender's discretion — and was, for hundreds of thousands of borrowers, in 2008. A HECM line of credit is guaranteed by FHA and remains available even if your lender goes out of business.

On an adjustable-rate HECM, yes. You can switch between monthly payments and a line of credit, or restructure, usually for a small administrative fee. A fixed-rate HECM is a single lump sum at closing with no flexibility afterwards — which is a large part of why we rarely recommend it.

About six weeks, typically: counseling in the first week, appraisal in the second or third, underwriting two to four weeks, then closing. Files with condo approval or repair requirements take longer.

Usually just the appraisal, $650 to $1,200, and the counseling fee if it is not waived. Everything else can be financed into the loan. If you stop before closing, the appraisal is generally the only money at risk.

Up to closing, at any point, for any reason. On most refinance transactions there is also a federal three-business-day right of rescission after signing, during which you can cancel and the loan is unwound.

Sometimes. Waiting increases your principal limit, so if there is no pressing need there is a real argument for patience. The counter-argument is the growing line of credit: open one early, leave it untouched, and the available balance grows every year regardless of what the housing market does. Which wins depends on whether you would actually leave it alone. It is worth modelling both.