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Reverse Mortgage FAQ

Rick May answers these common reverse mortgage questions about HUD, FHA reverse mortgages.

Common Questions about Reverse Mortgages

Reverse mortgages are a safe and secure financial tool but sometimes, a few misconceptions come up about this FHA (Federal Housing Administration) insured mortgage product. Let’s go over some common questions and concerns, so you understand the facts.

Q: Does the bank own my home?

A: This is without a doubt the number one misconception. No, the bank never owns your home. You remain the owner of your home and can stay as long as you wish. As the homeowner, you must continue to pay property taxes, home insurance, and continue with basic home maintenance during the loan period – that’s it. When the home is sold, the loan is repaid (including accrued interest and any fees) all remaining equity goes to you or your heirs.


Q: Will my children lose their inheritance?

A: The loan is repaid once the last remaining borrower moves out of the home. Normally, the home is sold, the loan (including interest and any fees) is repaid, and any remaining equity goes to you or your heirs. If your children choose to keep the home, they can pay the loan back by using such financial tools as refinancing the reverse mortgage. If they choose to sell the home, they are provided up to 12 months to complete the sale.



Q: How much of a loan am I eligible for?

A: 3 factors are considered to calculate how much equity you can access:

  • Age of the youngest borrower
  • Home value
  • Current interest rates.

Although we use the home value you initially provide us to calculate the preliminary loan amount, an independent appraiser must visit your home to ascertain the current value of your home. We then re- calculate the loan amount according to this official home value. All this will be organized by your personal reverse mortgage planner. They can also answer any questions or concerns you may have.

Q: What if you have a mortgage already?

A: That’s absolutely fine. If you qualify, a reverse mortgage will first pay off your existing mortgage and then give you the remaining proceeds. In fact, many of our borrowers use a reverse mortgage for that purpose – to eliminate monthly payments on their traditional mortgage.

Q: Are there any income/credit score requirements?

A: Because you don’t make any monthly mortgage payments, only proof of income to support your other regular monthly charges will be assessed.  A credit report will only be used to check for tax liens or other items that may affect qualification.

Q: Does a Reverse Mortgage require that I make monthly payments?

A: NO. There are never any monthly mortgage payments. However, payment of taxes, insurance and general upkeep of the home are the responsibilities of the homeowner. The loan becomes due when the youngest borrower permanently moves out of the home.