Quick read
- A reverse mortgage (HECM) is an FHA-insured loan for homeowners 62 and older that converts home equity into cash with no required monthly mortgage payment.
- You keep the title to your home, but you must keep paying property taxes and homeowners insurance and maintain the property.
- The loan balance grows over time and your equity decreases, so it is a big decision that deserves honest counseling.
- Independent HUD-approved counseling is required before you move forward.
Myth: “The bank takes my house.”
Fact: You keep the title and remain the owner. The loan is repaid when the last borrower leaves the home, sells or passes away, or if you do not meet loan obligations such as paying taxes and insurance and keeping up the home.
Myth: “My kids will inherit a debt.”
Fact: HECM loans are generally non-recourse, which means heirs are not personally liable for more than the home is worth. Heirs usually can choose to keep the home by repaying the loan balance or a lower amount tied to the home’s appraised value, sell it, or hand it over to the lender. Ask Daniel how this works for your family.
Myth: “I will not own my home anymore.”
Fact: Ownership stays with you. The loan is secured by the home, as a regular mortgage is.
Myth: “I do not have to pay anything.”
Fact: There is no required monthly mortgage payment, but you are still responsible for property taxes, homeowners insurance and upkeep. Falling behind on those can result in foreclosure. Interest and fees are added to the balance, so the amount you owe grows over time.
Myth: “It is a scam or only for people in trouble.”
Fact: The HECM program is insured by the FHA and requires independent HUD-approved counseling before you proceed. It is a financial tool that fits some situations well and others poorly. The honest answer depends on your goals, your age, your home and your other options.
What it costs
A reverse mortgage has closing costs, mortgage insurance premiums and interest that accrue on the balance. Those costs reduce the equity you have left. Compare them to alternatives, such as a HELOC, downsizing or a cash-out refinance, before you decide. Our guide on cash-out refinance vs HELOC covers two of those alternatives for homeowners who qualify.
How you can receive the money
- A lump sum.
- A line of credit you draw on as needed.
- Monthly payments.
- A combination of the above.
Questions to ask yourself
- Do I plan to stay in this home for a long time?
- Can I comfortably keep up with taxes, insurance and maintenance?
- What do I want my heirs to know and be able to do?
- Have I compared this to other ways to use my equity?
Want to see how this works for your situation?
Daniel will give you a straight answer, including when a different option is the better fit.
You are leaving this site to enter the secure application portal.Frequently asked questions
Who qualifies for a reverse mortgage?
Homeowners age 62 and older who live in the home as their primary residence and meet the program’s requirements. An existing mortgage is paid off with the proceeds.
Do I have to make monthly mortgage payments?
No monthly mortgage payment is required, but you must pay property taxes and homeowners insurance and maintain the home.
What happens when I move out or pass away?
The loan becomes due. You, your heirs or your estate can repay it, often by selling the home or refinancing. Ask Daniel about the options for your family.
Is counseling really required?
Yes. HECM borrowers must complete independent HUD-approved counseling before the loan moves forward.
Daniel helps Houston-area buyers, homeowners and investors choose the right mortgage and the right structure, and he will tell you when a loan is not the right move.
This article is for general educational purposes only and is not financial, legal or tax advice, a commitment to lend, or a rate quote. A Reverse Mortgage (HECM) requires independent HUD-approved counseling. Homeowners remain responsible for property taxes, homeowners insurance and home maintenance; failure to meet these obligations can result in foreclosure. Loan balance increases and home equity decreases over time.
Programs, rates, fees and terms are subject to borrower and property qualification, change without notice, and are set by our wholesale lending partners. Not all products are available in all areas or to all borrowers. Daniel Taylor, NMLS# 2703683, NEXA Lending, NMLS# 1660690. Equal Housing Opportunity.