Advice Center

If you are a homeowner age 62 or over, a reverse mortgage may be your key to an easier retirement. This “loan” lets you enjoy the equity you've built in your home without getting a home equity loan or having to sell your home to enjoy the profits. Keep reading to learn more about whether a reverse mortgage is right for you.

Is It Right for Me?

You are most likely to benefit from a reverse mortgage if:

• You live on a fixed income
• You don't want to sell
• You and any other borrower(s) are over age 62
• You have limited retirement savings
• Your home is valued over $100,000

How Does It Work?

With a Reverse Mortgage, you actually borrow against the value of your home. And, as long as your home remains your principal residence, you can opt not to repay a penny, although you can choose to make payments, if you wish.

• You make no monthly payments
• Repayment occurs only after the borrower's death or the sale of the home
• Cash is paid to you in a lump sum, by credit line or in monthly cash advances
• Cash availability varies by program, age of owner, value of home and interest rates

When your home is sold, the loan balance plus accrued interest and other costs are due and payable—and usually will be repaid from the proceeds of the sale of your home. Any remaining proceeds belong to you or your heirs. If your loan balance exceeds the value of your home, the proceeds from the sale of your home are all that you will pay. So neither you nor your heirs will be left with a debt, nor can you be forced to sell or vacate your home as long as you choose to stay in it.

Are There Implications to Taxes or Benefits?

Payments received through a reverse mortgage are considered a loan and so are not subject to taxes. In addition, these payments won't affect your Social Security or Medicaid benefits. However, your SSI and Medicaid benefits may be affected if your "liquid assets" exceed a certain level.