A reverse mortgage is one of the most misunderstood financial products in existence. I want to change that. Whether you’re a homeowner approaching retirement, a financial advisor exploring options for a client, or an adult child helping a parent — this guide answers every question I hear in my office.
What Is a Reverse Mortgage?
A reverse mortgage is a loan available to homeowners aged 62 and older that allows you to convert part of your home’s equity into cash. Unlike a traditional mortgage, you make no monthly principal or interest payments. The loan balance grows over time as interest accrues, and the loan is repaid when you sell the home, move out permanently, or pass away.
The most common type is the HECM (Home Equity Conversion Mortgage), which is insured by the Federal Housing Administration (FHA). This government backing provides important consumer protections, including the non-recourse clause — meaning neither you nor your heirs will ever owe more than the home is worth.
Do I Still Own My Home?
Yes, absolutely. This is the number one question I get, and the answer is unambiguous. You retain full ownership of your home with a reverse mortgage. The lender places a lien on the property — similar to a traditional mortgage — but you are still the homeowner. You can sell the home at any time. You can refinance. And if your home appreciates in value, that equity is yours, not the lender’s.
You do need to maintain the home, pay property taxes, and keep homeowner’s insurance in force — those are the obligations. But ownership? That stays with you.
Can My Heirs Inherit the House?
Yes. When the last borrower passes away, your heirs have several options:
- Sell the home to repay the loan and keep any remaining equity
- Refinance into a traditional mortgage to keep the home
- Purchase the home for 95% of its current appraised value (even if that’s more than the loan balance)
Because reverse mortgages are non-recourse, your heirs are protected. If the home’s value is less than the loan balance, FHA insurance covers the difference. Your heirs never owe the shortfall.
What Happens When I Die?
When the last borrower dies, the loan becomes due. Your heirs or estate typically have approximately 6 months to settle the loan, with possible extensions up to 12 months if they need more time to sell or arrange financing. During this period, no payments are required from the heirs — they simply need to communicate with the servicer and work toward resolving the loan.
The key takeaway: the reverse mortgage doesn’t force a fire sale. Your family has time and options.
Can I Buy a Home with a Reverse Mortgage?
Yes — through the Reverse for Purchase program (officially called HECM for Purchase). This is one of the most powerful and least understood applications of the reverse mortgage.
Here’s how it works: you combine your own funds (from the sale of a current home, savings, or other sources) with reverse mortgage proceeds to purchase a new primary residence. You make no monthly mortgage payments on the new home. The down payment is typically 45–62% of the purchase price, depending on your age and the interest rate.
I recently helped a couple in their 70s use a Reverse for Purchase to downsize from their large family home to a smaller, single-story home that better fit their retirement lifestyle — without taking on a new monthly mortgage payment. It changed their quality of life dramatically.
Is a Reverse Mortgage a Good Idea?
A reverse mortgage is a powerful tool when used correctly, but it’s not for everyone. It works best when:
- You’re 62 or older and plan to stay in your home long-term
- You have significant equity (typically 50%+ of your home’s value)
- You want to access equity without monthly payments
- You need funds for retirement income, healthcare, home repairs, or to eliminate an existing mortgage payment
- You’re comfortable with the idea that your loan balance will grow over time
It’s not ideal if you plan to move within a few years, if your heirs are counting on inheriting a home with no encumbrances, or if you’re looking for a short-term cash fix.
What Are the Costs?
Like any mortgage, a reverse mortgage has costs. Here’s what to expect:
- Origination fee: Capped by HUD at $6,000 for HECM loans
- Upfront MIP (Mortgage Insurance Premium): 2% of the home’s appraised value for HECM
- Monthly servicing fee: Typically $30–$35/month
- Closing costs: Similar to a traditional mortgage (title, escrow, recording)
- Interest: Accrues on the outstanding balance over time
Most of these costs can be financed into the loan itself, meaning you pay little or nothing out of pocket at closing. The trade-off is that the loan balance grows over time rather than shrinking.
A Real Story: Three Generations of Trust
One of my greatest career accomplishments involves a family that’s trusted me since 2002. I’ve done purchase and refinance loans for the original couple, helped all three of their children buy homes, closed a loan for their grandchild in 2023, and just this past year, put the original couple into a Reverse for Purchase loan — allowing them to downsize without a new mortgage payment. That’s more than two decades and three generations.
The Best Reverse Mortgage Lender in Newport Beach
When it comes to something as important as your home equity, you want a loan officer who will explain every detail — not rush you through the process. With 28 years of mortgage lending experience, a video-first approach that ensures you truly understand every number and every document, and deep expertise in the reverse mortgage space, I’m here to help you make the best decision for your retirement.
I serve clients in Newport Beach, Orange County, and across California — as well as Arizona, Colorado, Florida, Texas, and Washington.
Ready to explore whether a reverse mortgage is right for you?