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Applying For A Reverse Mortgage: What You Need To Know

applying for a reverse mortgage

As you approach retirement, you may be looking for ways to supplement your income or make your savings last longer. One option to consider is a reverse mortgage, which allows homeowners aged 62 and older to access the equity in their home without having to sell or move out. However, before you apply for a reverse mortgage, it's important to understand how it works and what factors to consider.

What is a Reverse Mortgage?

A reverse mortgage is a loan that allows homeowners to borrow against the equity in their home, receiving either a lump sum, monthly payments, or a line of credit. Unlike a traditional mortgage, the borrower does not need to make monthly payments to repay the loan. Instead, the loan is repaid when the borrower sells the home, moves out, or passes away.

How Do I Qualify for a Reverse Mortgage?

To qualify for a reverse mortgage, you must be at least 62 years old and own your home outright or have a low mortgage balance that can be paid off with the proceeds from the loan. You must also undergo financial counseling to ensure that you understand the risks and benefits of a reverse mortgage and can afford to maintain your home and pay property taxes and insurance.

What Are the Pros and Cons of a Reverse Mortgage?


  • Access to tax-free cash without having to sell or move out of your home
  • No monthly mortgage payments required
  • Flexible payout options
  • The loan is non-recourse, meaning you or your heirs cannot owe more than the value of the home


  • Interest rates and fees may be higher than traditional mortgages
  • The loan must be repaid when the borrower sells the home, moves out, or passes away
  • Reduced equity in the home may limit options for future borrowing or selling
  • The borrower is responsible for maintaining the home and paying property taxes and insurance

What Are Some Tips for Applying for a Reverse Mortgage?

Before you apply for a reverse mortgage, consider the following tips:

  • Shop around for lenders and compare interest rates and fees
  • Understand the payout options and choose the one that best fits your needs
  • Consider the impact on your heirs and discuss the decision with them
  • Consult with a financial advisor or attorney to ensure that a reverse mortgage is the right choice for your situation


What happens if I die with a reverse mortgage?

If you pass away with a reverse mortgage, the loan must be repaid. Your heirs can either sell the home to repay the loan or keep the home and pay off the loan with other funds.

How much can I borrow with a reverse mortgage?

The amount you can borrow with a reverse mortgage depends on your age, the value of your home, and current interest rates. Generally, the older you are and the more equity you have in your home, the more you can borrow.

Will a reverse mortgage affect my Social Security or Medicare benefits?

A reverse mortgage will not affect your Social Security or Medicare benefits, but it may impact certain need-based benefits such as Medicaid.

Can I use a reverse mortgage to buy a new home?

Yes, you can use a reverse mortgage to purchase a new primary residence, as long as you have enough equity in your current home to pay off any existing mortgage and cover the down payment and closing costs on the new home.

How long does it take to process a reverse mortgage application?

It typically takes 30 to 45 days to process a reverse mortgage application, but the timeline can vary depending on the lender and the complexity of the application.

What happens if my home decreases in value?

If your home decreases in value, you or your heirs may owe more than the home is worth when the loan is repaid. However, with a non-recourse loan, you or your heirs cannot be held responsible for the difference.

Can I pay off a reverse mortgage early?

Yes, you can pay off a reverse mortgage at any time without penalty. However, if you choose to do so, you will need to repay the full amount of the loan plus any interest and fees that have accrued.

What fees are associated with a reverse mortgage?

Common fees associated with a reverse mortgage include origination fees, mortgage insurance premiums, appraisal fees, and closing costs. These fees can vary depending on the lender and the location of the property.


Applying for a reverse mortgage can be a useful tool for homeowners looking to access their home equity in retirement. However, it's important to understand the pros and cons, eligibility requirements, and potential fees and risks before making a decision. By doing your research, consulting with experts, and carefully considering your options, you can make an informed choice that best fits your financial needs and goals.

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