Everything You Need to Know About a Home Equity Conversion Mortgage

Could a home equity conversion mortgage be right for you?

If you’ve been looking into a reverse mortgage, or are just curious about your options in retirement, chances are you’ve stumbled across a home equity conversion mortgage. You might not know what it is or how it works, but you definitely should.

What exactly is it?

While it may have mortgage in the name, it is actually quite the opposite. Believe it or not, a home equity conversion mortgage is actually a loan designed for those above the age of 62 years old.

This places it in the senior category, but you know what they say, 60 is the new 40. If you truly want to live out your senior years to the best of your ability, then a home equity conversion mortgage might be the financial vehicle to get you there.

It is not for everyone, but the beauty of a loan like this is that you have no obligation to pay it back while you’re alive. Sure, your estate will likely be held accountable, but you’ll never have to worry while you’re alive.

In some cases, it can truly be a stress free way to free up some money.

Most people have a lot of value in their homes, and you’re probably no different. It’s one thing to know your home is worth half a million dollars, but what if you could access it?

That’s the purpose of a home equity conversion mortgage. You may also have seen it written as HECM, so hopefully that clears up any confusion. If you’re curious about how exactly a HECM loan works, or if you’re curious about taking one out, then please pay very close attention.

So without wasting anymore time, let’s dive right in, and take a look at everything you need to know about HECM loans.

You ready?

How does a home equity conversion mortgage work?

Now that you sort of know what it is, you’ll probably want to know exactly how it works. These can be very tricky, so it’s important that you pay close attention and understand the facts. You also need to think of this as a loan, as opposed to a mortgage. Luckily, if the word loan startles you, you won’t have to worry about it while you’re alive or living in the home.

Think of it as a reverse mortgage type loan.

This might sound a bit confusing at first, but it’s really quite simple when you think about it. A HECM loan is essentially using the equity of your home as a loan. The loan is generally paid in payments, just like a mortgage, and is paid back by your estate.

The reason this loan is designed for people over the age of 62, is due to the fact that it can help supplement your retirement plan. Plus, if you don’t have a plan in place, a home equity conversion mortgage can quite literally be the difference between just surviving or thriving.

Do you need to pass a credit check?

Back in the good old days, there was really no type of credit check or accountability. This created a wild west scenario with these loans, because people started to forget about their property taxes. Obviously that wasn’t a great thing, so HUD did place some standard requirements.

If you want to be eligible for a home equity conversion mortgage, you need to have:

  • A single family or a 2-4 unit property
  • A state approved condominium (FHA)
  • The home should be a permanent residence
  • You need to pay attention to your property taxes

Every area has different regulations, so make sure you understand those clearly.

How do you receive funds?

There are many ways that the loan can be paid out to you. You can receive a lump sum, a line of credit to draw from, monthly payments for a set term, or monthly payments for life. You can also have any combination of these payment options, like a line of credit plus monthly payments, for instance. You can always increase, decrease, or cancel any payments after receiving your loan.


You should also be aware of the structure of these loans, and how they impact the payments you receive. You’ve probably heard the word “fixed” being thrown around, and that’s a common method of receiving funds. You should really only focus on a fixed term, because it will allow you to maximize your monthly benefit.

For example, if you choose a 20 year term, your benefit will be level through the course of 20 years. Plus, believe it or not, the interest rate will be as well. This allows a plan to be flexible, but also maintain a certain level of safety.

In retirement the time to take risks has come to an end, so make sure you go the safe route this time around.

Why a home equity conversion mortgage might be a good choice for you

These loans might not be for everyone, but believe it or not, most people can receive some type of benefit from them. It really depends on your financial situation, but knowing the benefits is definitely an important factor in the way you proceed. So let’s take a look at 3 reasons a HECM loan might be right for you.

You need a retirement supplement

If you need extra cash in retirement, or if social security just isn’t cutting it (which is usually doesn’t), then this might be a great option for you. It can provide you with a very solid monthly income that you can use for whatever you’d like. Plus, as long as you live in the home, you don’t need to worry about paying it back. You can choose the term option you like, and just set it and forget it.

If you have a 401k, this can help you obtain the maximum contribution (which is achieved when you wait until age 70 to draw funds). This is a great thing, because it will make sure you never outlive your retirement. You can also use this for something commonly referred to as social security maximization. If you didn’t know that you can holdout on your social security to get a larger monthly income 5 years later, now you do. If you wait until you’re forced to draw from it, just like a 401k, you can receive a much higher monthly income.

As we live longer, the fear of outliving our wealth grows stronger as well. Making sure you have plenty of cash flow is a great way to extend your wealth.

You have no retirement

About 60% of people live out their retirement years in poverty. You know the story, the one where a parent needs to move back home with their kids. Not only does this create a burden on your children, it could also make you feel like you failed. Nobody wants to feel like a failure, and you shouldn’t either.

If you’re part of that 60%, or are scared you might fall into that category after a decade of retirement, then a home equity conversion mortgage might just be your saving grace. It can make sure you don’t sell your house, and can help you spare future generations the stress of taking care of you financially.

You want to travel in your retirement years

Everyone wants to see the world before their time is up, and that shouldn’t be any different for you. You spend your whole entire life working to make sure you retire comfortably, but sometimes that just isn’t enough. You might be able to retire comfortably, but ask yourself if you can truly enjoy it.

If you’re someone who wants to see new things, visit a new destination, or return to a place you once loved, then a home equity conversion mortgage might be the best way to get there. You’ll find that this type of loan can free up the funds you need to truly enjoy retirement, and relax while you do do.

While there might be a negative stigma behind a reverse mortgage, you’ll find that a lot of that is due to poor education about the financial vehicle.

Why is there a negative stigma about a home equity conversion mortgage?

It wouldn’t be fair to you if we didn’t tell you there was a bit of a negative stigma about the industry. Just like other loan industries, the stigma is unavoidable. Luckily, you’ll find that with the right knowledge, a home equity conversion mortgage is a very safe option. So let’s look at the biggest myth about these loans.

They’ll take my house.

That sentence is the biggest myth about a home equity conversion mortgage. While it’s not impossible for you to lose your home, it is extremely unlikely if you go about it the right way.

Remember when we mentioned that you need to live in the house, or have it has your primary residence? Well, believe it or not, people try and cheat the system. Essentially, when you cheat the system, it has consequences.

The consequence? They’ll take your home away.

At the end of the day it makes sense. While it might seem like free money, there are still rules you need to adhere to. Nothing in life is truly free, and if you do things the wrong way, you’ll find that there are consequences.

So if you’re worried about losing your home, don’t worry, because chances are you won’t. Just make sure you understand the home equity conversion mortgage you get into, and follow all of the guidelines. This will allow to have a nice retirement, and keep your house in the process.


While a home equity conversion mortgage might seem intimidating, we hope that we cleared the air a little bit. There may be a negative stigma, but every industry has its own horror stories. If you play by the rules, know the facts, and adhere to the guidelines, you’ll never run into any issues.

While a home equity conversion mortgage is not perfect for everyone, it can truly be a lifesaver for retirement. You don’t need to live below your means.

If your home has equity, why not use it to enjoy yourself?

You work your whole life to retire, and you only get one chance to do it right. Why sit on the sidelines while others enjoy their blissful retirement?

You know the facts.

So the question is: are you ready to make a change?

Let’s make something happen together.

HECM Loan – Why Reverse Mortgages Are a Good Option for Many

The HECM loan (home equity conversion mortgage), often referred to as a reverse mortgage, gets a bad rap. But, it’s a powerful tool for many homeowners who are having a hard time paying their mortgage. It’s a great option for seniors who are looking to take out some of the equity in their home, in the event they need cash.

It’s important to understand how a HECM loan works, and what the positives are. So, let’s delve into some of the basics for those who are considering taking out a HECM loan on their home.

How HECM Loans Work

A reverse mortgage can be a great option for seniors and retirees, who are looking for a second stream or source of income on their home/equity. Although these mortgages have gotten a bad rap in years past, new regulations and government intervention, has made them far more attractive to those who are considering this option.

A reverse mortgage (or HECM) is the Federal Housing Administration’s reverse mortgage loan program. It works by

  • Enabling seniors take out a second mortgage on their home so they receive cash in hand
  • An origination fee is tied to a HECM loan (ranges from $2500 to $5000 on most homes)
  • No monthly mortgage payments are required (insurance, taxes, and maintenance on home is required)
  • Loans are repaid at time of move out or time of death

When people apply for a HECM loan, the funds can either be paid in a lump sum, through monthly payments, or as a line of credit.

Even with new regulations in place, some people are opposed to a HECM loans and reverse mortgages. We’re here to inform you that they’re a positive and powerful tool for many, and some of the reasons why you might want to consider one.

Benefits of a HECM Loans

There are numerous reasons you might want to take out a HECM loan on your home. If the property is in distress, needs major repair, or if you just need cash, you might be considering this option. Here are a few of the primary benefits that a HECM loan is going to deliver to you instantly.

Cash in Hand

You receive cash in monthly increments or as an upfront lump sum. Seniors and retirees who aren’t working full-time anymore, aren’t receiving a paycheck. Even with your pension, retirement savings, and other Social Security benefits, having additional cash in hand is a nice feeling. You can use it to pay bills, you can save it, or you can help family if you have kids in school or need help with finances. With a HECM loan, you instantly get paid for taking out a reverse mortgage on your home. And, since you eliminate the recurring monthly mortgage payment, there are many ways you can figure out how to spend that cash, or take the safer route, and invest it.

No Restrictions on Use of the Loan

It doesn’t matter how you choose to use the cash, it’s entirely up to the homeowner. Some homeowners might choose to make an investment in the property and upgrade it. Others will use the funds to pay the maintenance fees and property taxes, to take a much needed vacation, or as a form of savings, it’s the homeowner’s decision. And, some will use the money to put away for the future purchase of a new home, if they ever decide to leave the home and have to repay the mortgage owed on the property they are currently living in. There’s no restriction on how the money from a HECM loan can be utilized.

You Still Own Your Home

One of the most common misconceptions people have as it pertains to a HECM loan or reverse mortgage is that the lender takes ownership of your home. This isn’t true. You are still the owner of your home! So long as you are in compliance with the terms laid out in the reverse mortgage paperwork you sign, are making improvements on the home, are paying taxes, and insurance, you retain ownership of your home. Therefore, you can do what you choose to do to the home (as long as there aren’t restrictions in place in the contract regarding improvements or modifications to the home).

Continuing to pay your property taxes and insurance is critical to ensure compliance. So, make sure you are paying these expenses monthly and annually, and you’ll retain possession of your home under a HECM loan, as long as you live in it.

Protection from Housing Market Declines

The federal government insurers a HECM loan. This means if market values cause a huge dip in the price of local housing where you live, or in your property in general, you are not going to have to pay for it. What does this mean? Some benefits of federal government backing and security are

  • If the reverse mortgage ends up costing more than the actual value of your home, you don’t pay for it
  • The government will cover the difference in price if the property is less than the current market value at the time of sale
  • The home will be paid in full using the proceeds which are drawn in from the sale, nothing more

Basically, if the property declines in value immensely, you don’t have to worry about how you’ll come up with the additional funds to repay the government. You are protected and insured under the terms of your HECM loan.

It’s Tax Free

A HECM loan is a loan meaning the money earned from it is typically tax free. It doesn’t matter if the homeowner chooses to receive it as a lump sum amount when they sign the loan or if they receive it in monthly increments, there are no tax penalties they will pay on that loan.

Low Risk of Decline in General

The low risk of housing market declines is just one of the benefits. It’s difficult for homeowners to run the risk of defaulting on their loan or mortgage if they don’t have to make monthly payments on it. Since you’re no longer paying a mortgage, you don’t run the risk of defaulting on this mortgage.

No More Mortgage Payments

You don’t have to pay a mortgage each month. You can utilize those funds to pay off an existing mortgage, credit cards, or other lines of credit that you have open instead. You repay the mortgage funds at the end of the reverse mortgage’s term, therefore, you can use the funds you would be using to pay your mortgage, for paying off other loans. Or, you can save these funds to increase your nest egg and retirement savings as you get older.

No Annual Fee and No Prepayment Penalties

There is no annual fee to keep the HECM loan open. There are no penalties on prepaying the loan early either. A HECM loan ends when the borrower moves or at the time of death. If a borrower plans on moving at a certain date, and chooses to prepay the loan early, they can do so.

Qualification is Easy

In fact, it’s much easier than it was when you first applied for and were approved for a mortgage. There aren’t major hoops to jump through when applying for a HECM loan. No monthly payments are required on the home. Therefore, even if you are limited in income, you are likely going to be approved for the reverse mortgage with most lenders you apply through as a homeowner.

Since your application isn’t solely based on your income or your credit score alone, the process is much easier for most applicants. Especially for seniors who are no longer working full time, and rely on investment accounts, savings bonds, and retirement accounts, as their major source of income at this point in their lives.

Extend Other Retirement Saving Lines

If you’re over 62, Social Security income is one of the primary source of income for your family. By delaying the receipt of those benefits, you can increase the amount you’ll receive anywhere from 6 to 8% in some cases. Many people don’t have that option. A HECM loan affords you that option since you’re receiving a steady stream of cash in one lump sum payout or as a line of credit. Utilizing the cash from your reverse mortgage also allows you to stop dipping into that 401(k) or other retirement and pension savings plans so early.

By extending the amount of time before you actually do apply for Social Security income and your retirement benefits, you’ll increase how much you eventually do receive, and you won’t have to pay taxes (on the retirement accounts) until you actually receive those benefits.

Regardless of where you are in life, a HECM loan is something you might want to consider. Especially for retirees or individuals nearing that age, it is a powerful tool to help increase equity in your home. And, if you know its the home you want to live in forever, it’s a great way to increase immediate cashflow, set aside retirement funds, and have the backing of a federally funded and government insured program, without having to make a monthly mortgage payment on your home. These are a few of the many great benefits that a HECM loan poses for homeowners who are debating if it is a good option for their family.

Choosing the Right Reverse Mortgage Companies in 2019

When it comes to a reverse mortgage, or a HECM loan, you’ll find plenty of options out in the wild. Hundreds of reverse mortgage companies exist, but are they really right for you?

What even makes a good reverse mortgage company?

A good reverse mortgage company caters to your needs, gets you fast approval, and makes sure you’re well informed through the process. Embarking on the journey of a reverse mortgage can be difficult, and the company you go with should be more worried about your pocket than theirs.

If you’re curious about why our company stands out from the pack, don’t worry, because you’re about to find out. We’ll be taking a look at some of the top reverse mortgage companies out there, and providing you with a brief overview of why they might not be the best choice.

In the realm of reverse mortgage companies, a few bad eggs can really tarnish the industry. Please keep in mind that these companies are not bad at what they do, we just think that you can do better.

So without wasting anymore of your precious time, let’s dive right in, and take an in depth look at some of the more well known reverse mortgage companies.

Why we feel you can do better than the best reverse mortgage companies

First and foremost, just because Google claims they’re the best doesn’t mean that they’re a superior company. Many things need to be taken into account, and when you keep reading you’ll find that each of the top reverse mortgage companies are far from bulletproof.

We think you can do better for a few reasons, but the main one is quality service and low fees. One thing that many people overlook with these loans is the fee associated with them. Most of the top reverse mortgage companies have high fees, and while fees are a necessary evil, you need to understand how much they should be and when too much is too much.

We believe in a quality reverse mortgage, and one that isn’t rushed. A reverse mortgage that isn’t shoved down your throat, but one that is still closed with a bit of haste. You shouldn’t sacrifice quality or education for speed, and we’re strong believers of that.

So we’re going to give you some insight into the top reverse mortgage companies. They’re all good companies, but we think that there is more than just a good rating.

At the end of the day, we know you can do better. We’ll start with AAG.


AAG is one of the big names when you look at reverse mortgage companies. They have a huge client base, and employ over 1,000 advisors.

Let’s take a look at some of the stats about AAG:

  • Over 1,000 advisers
  • More than twice the loan volume than any other lender in the industry
  • Operations in 49 states
  • A BBB “B+” rating

It is no mistake that AAG is one of the largest reverse mortgage companies in the business, but are they really that good? Sure they have tons of employees, a solid reach, and a decent rating, but that’s just on the surface.

Let’s see why you could do a bit better than AAG.

The main thing you should be looking at is their financial rating. Sure, a B+ looks good on paper, but is it actually a good rating in the financial world? Believe it or not, a B+ is far from the best rating. Depending on the industry, some companies can achieve ratings upwards of A++.

In school a B+ might have been a great grade, but in the world of business, it is not exactly the best. When looking reverse mortgage companies, this is something you need to keep in mind. The higher the rating, the better chance that company will be around for the long term and able to accommodate changes in the market.

So while AAG might be one of the best reverse mortgage companies in the game, their rating speaks otherwise. This is definitely something you need to consider when looking for the best reverse mortgage in regard to quality. They might be the #1 rated company, and for good reason, they just need some work rating wise.

We think you deserve better than a B+.

Remember, with a reverse mortgage, its quality over quantity.

Finance of America Reserve

Finance of America Reserve is also one of the best reverse mortgage companies in the game. They have great ratings, a quick close time, and operate in all 50 states. They’re doing something right, but are they doing everything right? We’ll be answering that exact question.

Let’s take a look at some of their featured stats:

  • A+ rating
  • They offer free information packets
  • Operations in every state
  • A knowledgeable origination department quick closing time

So you can see that they’re definitely one of the best reverse mortgage companies in the game, but can you do better? We definitely think you can, and here is why.

While Financial of America Reserve might have a great rating, good advisors, and nationwide operations, there is one area they’re lacking in. Believe it or not, their customer satisfaction rating is only 96%. That is definitely a great rating, but what about the 4%?

If you check out some of the reviews, you’ll find that their close time is not always quick. Their advisors may be knowledgeable, but the information packet is actually a bit confusing. When it comes to working with people over the age of 62, clarity is key. You want a company that keeps things simple, clear, and concise.

We’re not comfortable letting you fall into that 4%. We think that your needs should be accommodated 100% of the time, with no chance of failure. Don’t you feel that way too?

Nobody should feel like there is a risk involved with a reverse mortgage. While some of the best reverse mortgage companies have great ratings across the board, someone always seems to be left behind.

We want to make sure you never get left behind, and that your reverse mortgage is always tailored to your specific needs.

There is no need to find yourself in a horror story with your retirement in jeopardy.

One Reverse Mortgage

One reverse mortgage is also one of the best reverse mortgage companies in the game, and they hold that title for good reason. They operate in many states, and have tons of information online for their prospects. While this may be great, we still think you can do better.

Let’s take a look at some of their features:

  • Not licensed in every state
  • Plenty of online information
  • The fees are not expensive
  • Decent financial ratings
  • Decent customer satisfaction ratings

So while they might be one of the best reverse mortgage companies in the game, we definitely think you can do better.

Believe it or not, their overall rating is only a 2.5 out of 5 starts on most review pages you’ll find. That’s a 50%, and that’s just unacceptable. We think you’re a 5 start client, so why should you work with a 2.5 star company?

There are many reasons for this, but the main one is aggressive marketing. We believe in passive selling, which requires very little persistence. We want to inform you, but we don’t want to bludgeon you with information.

Unfortunately, this is exactly what some of the top reverse mortgage companies do, and we don’t think that’s fair to you. You should never feel pressured when it comes to a reverse mortgage, because at the end of the day it’s a huge decision. A decision that takes time, and a process that should be quick but not rushed.

So while One Reverse Mortgage might be a great company in many aspects, we feel that you can actually do a bit better overall. Nobody should feel rushed, and nobody should be treated like their only worth 2.5 stars.

Sometimes it’s not about the length of the process, but about getting it done right. We want to make sure your needs are satisfied before we throw you into a product, and that’s just our philosophy. Some reverse mortgage companies might be good, but are they great?

The verdict

When you set out to find the perfect reverse mortgage, you want to make sure the reverse mortgage companies you look at have your best interests in mind. While a lot of the top companies may very well be good at what they do, have you ever wondered if you could do better?

Well, believe it or not, chances are you can.

We feel like a reverse mortgage company should be more concerned about your wealth than theirs, and that’s what really matters at the end of the day.

So while many of these reverse mortgage companies may be great at what they do, we feel like you deserve better.

You deserve ethics, morals, a fast process, and a clean close. Unfortunately, some of the top reverse mortgage companies don’t believe in this the same way that we do.

Why should you sell yourself short? A reverse mortgage is a great tool, but only if used correctly. Make sure your needs are taken care of. Now you know the facts, so the question is: what will you do when the time comes?

Everything You Need to Know About a Reverse Mortgage

The age old question of reverse mortgages

A reverse mortgage used to be a phrase that left a bad taste in your mouth, but that doesn’t have to be the case anymore. Everything has a time and a place, and a reverse mortgage is certainly no different.

You don’t need to fear a reverse mortgage anymore. It might seem devastating, but believe it or not, the benefits can actually outweigh the cost.

If you’re someone who is on the fence about reverse mortgages, then please pay close attention. As long as you know the facts, you can make an educated and highly lucrative decision.

It’s time to stop listening to your neighbor who knows nothing about finances, and take the necessary steps you need to fully understand how a reverse mortgage works. They’re no longer a last resort option, but a highly lucrative one.

At the end of the day, nobody is going to seize your home if you do it right, and it can definitely be a lifesaver or great leverage for a business opportunity.

So let’s not waste anymore of your precious time, and dive right in. We’ll be showing you the facts, and explain everything you need to know about reverse mortgages.

What is a reverse mortgage?

A reverse mortgage is a loan that is designed for people over the age of 62, and can be used as an additional cash flow vehicle in retirement. The beauty of a reverse mortgage is that it is paid back upon death. They also tend to be referred to as HECM reverse mortgage.

These types of loans are designed to use the equity of your home as collateral. This means that the value of your home, after you pass away, is what will be used to pay back the loan. Also, you should know that this is different from a home equity loan, because you won’t need to make mortgage payments with a HECM based loan.

Who is eligible?

Most people who are over the age of 62 are eligible for this type of loan. The youngest person on the loan must be at least 62, but you can apply at anytime during your retirement. You still need to make sure you’re financially eligible through the standards HUD puts out.

When is it paid?

A reverse mortgage is paid back when you pass away. The loan is payable by your estate, and the equity of the home is used to pay off the remaining balance on the loan. This is a good thing, because the value of a home usually goes up over the years to help offset this. Plus, believe it or not, personal assets are not liable.

How can I take distributions?

There are 4 primary ways that you can get paid, and they all make sense depending on the situation.

  • You can take out a lump sum of funds
  • Monthly income payments for as long as you live
  • You can choose to get monthly payments for a set term
  • You can choose a line of credit that you can draw from until it’s empty
  • Plus, believe it or not, you can actually combine some of these options

Everything about a reverse mortgage is flexible, and once you keep reading, you’ll question why people used to despise them so much.

So let’s take a look at how they can help you down below.

How it could help

This is a loan that is designed for those who are in their retirement years. At the end of the day, unless your Bill Gates, everyone needs a little bit of help in retirement.

This is where the reverse mortgage loan comes in.

The loan is designed to be paid in either a lump sum, a designated cash flow, or even a line of credit. Plus, believe it or not, the value of the loan can actually increase overtime. This is due to the fact that the value of your home will likely increase over the course of 20 years.

Why is it good for retirement?

The loan wouldn’t only be available to those over 62 if it wasn’t a hidden gem. There is a reason you have to wait so long to get one. Trust us on that one.

It is good for retirement for a few reasons, and don’t worry, we’ll take a quick look at all of them

People outlive their money

It is no secret that we’re starting to live longer. A time where people only used to make it to 70 or 80 is over. There are literally people over 100 walking around out there. If you want to make sure you have enough cash flow to retire for 30 years instead of 20, a reverse mortgage could be a real life saver. Even as a line of credit, it can help you stay in your home instead of being forced out.

If you’re someone who is worried about the future, or is nervous about having enough money to sustain you into your 90’s, a reverse mortgage can be a great option to help ease your mind.

It negates your mortgage payment

Not everyone is able to pay off their mortgage before retirement comes knocking on the door. That is totally okay, because a reverse mortgage can help relieve you of some of the more demanding payments you might have.

People used to believe that if you still had a mortgage you could not take out a reverse mortgage on your home. This couldn’t be more far from the truth, and at the end of the day, having no mortgage payment in retirement is a real lifesaver.

If you’re someone who is worried about paying their mortgage in retirement, then a reverse mortgage might be right for you. It can help reduce some of that stress you might have, because you won’t have to pay the mortgage anymore.

It can work as a retirement supplement

Everyone thinks that they’re all set for retirement, but most of the time that’s sadly not true. A reverse mortgage can actually work as a supplement for your retirement plan, and we’ll show you exactly why.

Most people don’t know this, but the longer you hold off on taking government mandated contributions (like social security), the more money you’ll receive in income. If you’re social security income is only $2,000 when you’re 62, it could actually be upwards of $3,000 if you wait until you’re 70.

This could be a huge game changer, because it can help you maintain your bills longer, utilize your IRA accounts more effectively, and help you survive the later years of retirement. If you’re still on the fence, think of a reverse mortgage as a supplement.

You can use the line of credit, or take an income distribution, as a way to extend the life of your other retirement plans. You won’t need to worry about longevity with a reverse mortgage.

It can help you retire

Did you know that half of families approaching retirement age have only $5,000 saved? Well, believe it or not, that’s a scary fact. Unfortunately, not everyone is able to save the money they need for retirement. You only get one shot at this, so you need to make sure you do it right.

This is where a reverse mortgage can be a lifesaver, because it can free up the cash you need to finally retire. You don’t need to work until you’re dead, you just need to make sure you do it the right way. If you’re short on funds for retirement, a reverse mortgage might be an excellent option.

Why there is a bad stigma about reverse mortgages, and why it’s a myth

In the past these types of loans used to be looked at as a last resort. Even 20 years ago, the outlook was completely different. People really had no idea how they worked, or who they were for. People also did understand the difference between a reverse mortgage or a home equity loan.

Why were people scared?

People were mainly scared due to the fact that you’re borrowing against the equity of your home. This had people nervous about banks coming in and taking their property.

Luckily, it is very difficult for the bank to take over your home, and they would need you to pass away, leave home entirely, or have the last living heir pass away. The only time you need to pay this back is when you pass away, which makes it a no brainer if you need cash.

People were also worried, because of the word loan. Any type of loan has received a lot of abuse over the past decade or so. While some loans might be out to get you, a reverse mortgage does no such thing. It is paid back after you pass away, and the value of the loan can actually go up. It is tied to your equity, so it can be quite advantageous in this sense.

If you do the research, and make sure you understand the purpose of the loan, it does not have to ruin. While it used to be a last resort in the past, a reverse mortgage can be a lifesaver for those in retirement.

It’s really a double win if you do it correctly


Sure, a reverse mortgage is a huge decision, but it doesn’t need to keep you up at night. You just need the right information to make a truly informed decision, and you’ll find that there is nothing to worry about.

Now that you know the facts, hopefully you can make a truly informed decision. Reverse mortgages have received a bad reputation over the years, but they can truly play a huge part in anyone’s retirement plan.

A reverse mortgage can be a make or break, and can help make sure you never outlive your money. Nobody wants to move back in with their kids right? A reverse mortgage can definitely help you prolong your retirement, and keep you self sufficient.

You should definitely consider learning more, or at least looking into a consultation. Not only will it help you better understand a reverse mortgage, it will also peak your interest.

The myth has been busted, and we laid the facts out for you.

The question is: are you ready to learn more? It’s time to step down off that fence, and make that crucial decision.

Reverse Mortgage Refinance – HECM to HECM

If you have had your reverse mortgage for at least 18 months, you may be eligible for a reverse mortgage refinance. Refinancing your reverse mortgage can have a lot of benefits, as a reverse mortgage refinance can be used to increase the amount of money that  you have available or to lock in a lower rate. Since every financial situation is unique, it is not possible to make a blanket recommendation about refinancing a reverse mortgage, but we can provide you with some of the factors that could influence your decision.

Why is a reverse mortgage refinance a good idea?

Some financial reasons that could make a reverse mortgage refinance a good idea for you are:

  • Interest rates are lower
  • Property values have increased
  • The principal limit factor has increased

There are other non-financial benefits to refinancing the reverse mortgage, too, like being able to name your spouse on the loan, and being able to change the type of reverse mortgage (this is true if you have a private reverse mortgage and would like to switch to the HECM program).

A reverse mortgage refinance has closing costs associated with it, but these costs can be paid out of the loan proceeds, which means that the refinance can come at no out of pocket cost to you.

If you are looking to refinance your reverse mortgage, there are some requirements that must be met:

  • 18 month waiting period – You can only refinance your reverse mortgage once every 18 months.
  • “Net tangible benefit” – This is a fancy way of saying that the reverse mortgage refinance must benefit you in some way
  • 5:1 loan amount increase to closing costs ratio – This requires that the loan amount increase be at least 5 times the closing costs you pay. For example, if you pay $500 in closing costs, you would have to receive $2,500 or more in additional funds.

The reverse mortgage refinance option has become extremely popular. Throughout the United States, thousands of reverse mortgage holders choose to refinance their reverse mortgage every year.

Why might a reverse mortgage refinance not be for me?

If you are happy with the current state of your reverse mortgage and are not looking for any additional cash out, then it may not make sense to refinance your reverse mortgage. Or, if you are looking to preserve the equity in your home, this program may not be right for you.

Many reverse mortgage holders, however, understand that they may not have a lot of equity in their homes, and they are okay with that because they can continue to live in their homes. This is why the reverse mortgage refinance is such a popular option.

One final reason that a reverse mortgage refinance may not be for you is if there is not a large benefit to you. Even if the closing costs are low but the benefit is only a few hundred dollars, refinancing your reverse mortgage may simply not be worth the time that is required.

Reverse Mortgage FAQ

Reverse mortgages are not always the easiest financial products to understand. For this reason, we’ve compiled a guide full of common questions relating to reverse mortgages. This reverse mortgage FAQ is a great guide for anyone who might have a few questions that are not yet answered. Also, if you have a question about reverse mortgages, feel free to ask it by contacting us, and we will be sure to answer it below.

Proceeds from a Reverse Mortgage – Reverse Mortgage FAQ

“How much money can I get out of my reverse mortgage?”
The specific amount of money that you are able to get out of your reverse mortgage depends on your age, the amount of equity in your home, and the value of your house. Since these factors differ from person to person, it can be difficult to give a one-size fits all answer. For this reason, we recommend that you use our Reverse Mortgage Calculator to get a better understanding of the amount of money that you may be able to take out from your reverse mortgage.

“What if I do not pay my existing mortgage?”
With a reverse mortgage, your existing mortgage is paid off via the proceeds from the reverse mortgage. This means that you would never have to worry about making another mortgage payment again. The only thing you would be responsible for are your property taxes and homeowner’s insurance.

“How long does it take to receive my funds?”
Once you begin working with a lender, you will be able to receive your funds pretty quickly. However, getting your reverse mortgage funds is a two way street, as the lender will need information from you, and the faster that you are able to provide the information to your lender is the faster that you will be able to get your reverse mortgage proceeds. From your first phone call to closing can take from 14 to 45 days, with most cases leaning closer to the 14 day mark, but every case is different.

“What if my mortgage balance goes up?”
Due to the way a reverse mortgage works, the old mortgage will be paid off, so this balance will decrease. The balance for the reverse mortgage will grow, and this is due to the interest being added to your reverse mortgage. If you do not want the balance to grow, you have the option to pay off the interest, but this is completely optional and not necessary.

“What can I use the money from the reverse mortgage for?”
Whatever you would like! Reverse mortgages are extremely flexible, and you can use the money from your reverse mortgage for anything from a home improvement to paying off medical bills to taking a vacation. Additionally, the money is yours, you are under no obligation to spend it in any particular way!

“How much do I have to pay to get a reverse mortgage?”
You will not incur any out-of-pocket costs. There are some costs associated with the reverse mortgage, but the costs are paid for out of the loan proceeds. However, these costs are legally capped to ensure that you are not paying too much for a reverse mortgage.

Qualifications and Requirements for a Reverse Mortgage – Reverse Mortgage FAQ

“Does my home qualify for a reverse mortgage?”
In most cases, yes! While a full appraisal is a required part of the reverse mortgage process, most homes are able to pass and be used for a reverse mortgage.

“What are the requirements for a reverse mortgage?”
There are not a lot of requirements. You must be a homeowner over the age of 62, intend to continue living in your house, and have enough equity in your house for the reverse mortgage. There are no medical or financial requirements that can stop you from getting a reverse mortgage.

“Can the bank/lender take away my home?”
The bank or lender is not able to take away your home. With a reverse mortgage, you do not sign your home over to the bank. You continue to retain title to the house, so you are the owner, just like a traditional mortgage.

Taxes and Benefits for Reverse Mortgage Holders – Reverse Mortgage FAQ

“Do I lose my social security or medicare benefits if I get a reverse mortgage?”
No, a reverse mortgage will not cause you to lose your social security or medicare benefits. However, you will need to use the proceeds from the reverse mortgage before one month. After this period, they will count as an asset if they simply sit in a bank account.

“Will I be taxed on the money I get from my reverse mortgage?”
No! Since a reverse mortgage is a loan advance, it is not actual income, and it is not taxed.

Advising for a Reverse Mortgage – Reverse Mortgage FAQ

“Why might a reverse mortgage be a good fit for me?”
A reverse mortgage might be a good fit for you if you have a lot of equity in your home, are over the age of 62, are able to meet the requirements, and are interested in supplementing your current income with additional proceeds.

“Why might a reverse mortgage not be right for me?”
A reverse mortgage may not be the right choice for you if you are looking to leave your home to your heirs or plan to move out of your house in the next two years. In this case, there are likely financial products that would be more applicable to your situation, and we would recommend speaking to a financial advisor or financial planner to discuss options.

Thanks for reading our Reverse Mortgage FAQ and feel free to let us know if you have any questions about reverse mortgages.

Reverse Mortgage Facts

Reverse mortgages have become a popular financial product for homeowners over the age of 62. Reverse mortgages allow homeowners to take advantage of the equity that they have built up in their home and begin receiving payments. Planning for retirement can be difficult, and a reverse mortgage is a great way to aid your retirement planning. In fact, one in three retirees get 90% or more of their monthly income from social security payments, according to a study by Boston College. A reverse mortgage can supplement social security income while still living in your home. Below are some common reverse mortgage facts and common misconceptions about reverse mortgages.

Reverse Mortgage Facts

These are reverse mortgage facts that apply to all people who take out a reverse mortgage loan:

  • You do not have to pay back your reverse mortgage. Your reverse mortgage will not have to be paid back until you move away from the home or pass away.
  • You get most of your home’s value. If you have paid off at  least half of your mortgage, you are eligible to receive a large part of your home’s value from the reverse mortgage.
  • You can get more money out of your reverse mortgage as you age. As you get older, the amount of money that you can borrow increases.
  • You can never owe more than the value of your home. If your home is valued at $200,000 and the amount owed is $250,000, no one will owe the additional $50,000.
  • You can always refinance. After a year and a half, you are able to refinance your reverse mortgage for a lower interest rate. This would allow you to tap into additional equity in your home and save money on interest costs.

Interested in a reverse mortgage? Find out how much you stand to receive with our reverse mortgage calculator.

Common Misconceptions About Reverse Mortgages

  • “The lender can take your house while you are living in it.” In most reverse mortgages, the lender does not have the right to take away your house while you are living in it. You would still retain the title to your home.
  • “Interest rates on reverse mortgages can be higher than interest rates for traditional mortgages.” Interest rates depend heavily on credit scores. By having and maintaining a good credit score, you are able to take advantage of better interest rates than a borrower with a worse credit score. A borrower with good credit can actually get better interest rates on a reverse mortgage than a borrower with poor credit can get on a traditional mortgage.
  • “Reverse mortgages are loans of last resort”. While some people do use reverse mortgages as a last resort, they are not intended for this purpose. Rather, they are useful and important planning tool for homeowners over the age of 62.
  • “Reverse mortgages are full of fees and additional costs”. Reverse mortgages come with a few fees, but the fees associated with reverse mortgages are governed by law. Legally, the fees charged cannot exceed 20% of the amount of money that you will receive.
  • “You must own your home free and clear to qualify”. Contrary to popular belief, you do not need to have full ownership of your home to qualify for a reverse mortgage. You do need to have enough equity in the home to be able to pay off your first mortgage with the proceeds from the reverse mortgage. This helps borrowers free the money that would otherwise go to a monthly mortgage payment.
  • “The lender owns your home”. Similar to a traditional forward mortgage, a reverse mortgage is secured by a lien on the property, so you retain the title to the home. As long as you continue to maintain the home, pay property taxes, and insurance, you will continue to own the home.

Additional Resources

How a Reverse Mortgage Works

Are you uncertain about how a reverse mortgage works? Maybe you have heard people talking about a reverse mortgage, but you might still be wondering how the whole process works.

How a Reverse Mortgage Works

A reverse mortgage is a home equity loan designed for older homeowners and does not involve monthly mortgage payments. Instead of requiring monthly mortgage payments, the existing equity in the home is used to pay the borrower. Reverse mortgage loans will continue to pay the borrower until they move out of their home or pass away.

Reverse mortgages are an excellent way to supplement retirement income. Reverse mortgages are also extremely flexible, allowing borrowers to receive their money as a lump sum, a steady stream of monthly payments, or as a line of credit that borrowers can tap into as they need. Since reverse mortgages are so flexible, they have become a popular and useful tool for seniors planning their retirement.

There are several different types of reverse mortgages, but the most popular one is a federally-insured reverse mortgage known as HECM. These are loans designed for borrowers over the age of 62 and allow them to use their home equity to receive money, all while living in their house.

How can a reverse mortgage help me?

Reverse mortgages are able to help a variety of seniors, and they can be a useful retirement planning tool. Many people who benefit from a reverse mortgage:

  • Want to remain in their home
  • Are able to maintain their home, pay their property taxes, and insurance
  • Want to be able to supplement their existing income
  • Want to eliminate their existing mortgage
  • Want to improve their existing monthly cash flow
  • Can use the money for anything they want

Reverse mortgages are useful for people who wish to have money set aside for a rainy day or for people who may want to pay off debt like medical bills. Reverse mortgages are also great for people who want to make an improvement to their home.

Why might a reverse mortgage not be for me?

While the versatile option of a reverse mortgage is great for many people, reverse mortgages are not for everyone. Reverse mortgages are not a great option for people who:

  • Do not have significant equity built up in their home
  • Do not plan to live in their house for more than 12 months
  • Are not able to pay property taxes, homeowner’s insurance, or keep the home in good condition

How much money can I get from a reverse mortgage?

There are several factors that help determine the amount of money you are able to receive through your reverse mortgage. For the best estimate, use our free Reverse Mortgage Calculator.

These are the key factors that influence the amount of money you will be able to receive through a reverse mortgage:

  • Age (or, if you are married, the age of the youngest spouse) – The older you are, the more money you can receive.
  • Value of the home – The more valuable your house, the more money you can receive.
  • Interest rate – The lower the interest rate, the more money you can receive.
  • Mortgage balance – If you have a mortgage, the lower the balance on the mortgage, the more money you will be able to receive.

How does a reverse mortgage work?

The process to get a reverse mortgage is relatively simple. Below is a simple checklist to help you get started.

  • Find out how much money you can receive from a reverse mortgage with our Reverse Mortgage Calculator.
  • Get a free information kit to learn more and speak with lenders
  • Request a call from a lender and get a proposal
  • Complete required HECM counseling
  • Complete a loan application and appraisal
  • Start receiving your money

Reverse Mortgage Pros and Cons

A reverse mortgage has the potential to be a great source of income providing guaranteed funds for the future, and it may even become an integral part of your retirement plan. Reverse mortgages, however, do not always work for everyone, so it is important to understand the reverse mortgage pros and cons. This webpage is a great place to start to gain a better understanding of whether a reverse mortgage is the right option for you.

Pros of a Reverse Mortgage

  • Reverse mortgages can supplement the income source of homeowners age 62 and older.
  • You can live in your home and continue to hold the title to the home.
  • Loan proceeds can be used for whatever you want. Many people simply supplement their income, but some use the proceeds to complete home renovations, pay for tuition, and many other uses–after all, the money is yours to use as you wish.
  • Reverse mortgages are flexible. You can take the funding as a single payment (‘lump sum’), as a line of credit that you can use as you need, or as a monthly payment for however long you like. You also have the option to use a combination of these choices.
  • The funds that you receive from your reverse mortgage can actually be used to pay off an existing mortgage. While a reverse mortgage will place a lien on the home, you are never required to make a single principal or interest payment. This means that you will never have to make another payment on your existing mortgage.
  • There are no payments to be made for a reverse mortgage. As long as you pay your property taxes, keep homeowner’s insurance, and maintain the property, you will never have to make a payment.
  • Closing costs and fees can be paid from the proceeds of your reverse mortgage, so there are virtually no expenses associated with the loan closing.
  • The money from a reverse mortgage loan is generally not considered to be taxable income. Since reverse mortgages are considered to be loan advances, they are not taxable. This means you will not have to pay taxes on this money.
  • A reverse mortgage does not have any effect on Social Security or Medicare benefits, so you can continue to receive the same benefits you receive today.
  • Reverse mortgage loans are non-recourse loans, so neither you nor your relatives will have to pay any amount of the mortgage that exceeds the value of your home. This means that if your reverse mortgage balance is $120,000 and your home is valued at $100,000, you or your relatives are not liable for the excess $20,000.
  • Reverse mortgage loans can be refinanced to access more proceeds. As you age, you are able to access more of the home’s value. Additionally, as your home increases in value, you are able to access even more money.
  • After the loan has been paid back, you or your heirs will own the remaining equity in your home.

Cons of a Reverse Mortgage

Although there are many pros to a reverse mortgage, there are some cons to a reverse mortgage as well. Now for the cons section of reverse mortgage pros and cons:

  • The balance on the loan increases over time as interest on the loan accumulates.
  • As home equity is used, there are fewer assets remaining for your family. You can still leave the home for your family, but they will need to pay off the remaining balance on the reverse mortgage. Often the loan balance is repaid by selling the home, but the balance can also be repaid by a traditional mortgage loan.
  • The fees associated with a reverse mortgage can be higher than a traditional mortgage. However, lower-cost reverse mortgage options do exist.
  • The loan is due and needs to be repaid when it matures (the last surviving borrower passes away, the borrower no longer lives in the home, or if the borrower leaves the property for more than 1 year). The loan can also become due if the homeowner does not pay property taxes, homeowner’s insurance, or allows the property to fall into disrepair.

Conclusion: Reverse Mortgage Pros and Cons

The reverse mortgage pros and cons are many. It is important to work with your lender to determine how to mitigate any issues associated with a reverse mortgage. Knowledgeable lenders are able to help reverse mortgage holders deal with any issues and help a reverse mortgage successfully fit into your retirement plans. Learn more

Maryland Reverse Mortgage

What is a reverse mortgage?

A reverse mortgage is a special type of loan for homeowners over the age of 62. A reverse mortgage allows homeowners to stop making mortgage payments and start receiving money for the equity that homeowners have built up in their home (generally, this equity is built through mortgage payments). This means that the money can instead be used for other purposes, like supplementing income, paying for expenses, complete home improvements, or any other purpose. Read more about reverse mortgages →

Reverse Mortgage for Maryland Residents

Increasing home values in the state of Maryland make reverse mortgages particularly desirable for seniors residing in Maryland. The National Reverse Mortgage Lenders Association recently found that homeowners 62 and older have seen their home equity increase by 3.1% in first quarter of 2017. The increase in equity allows seniors to get more money out of their reverse mortgage than they would otherwise be able to.

Finding a Reverse Mortgage Lender in Maryland

Maryland is home to many different reverse mortgage lenders that are able to provide diverse solutions. Recognizing that homeowners and financial situations are different, lenders are able to create loan packages that may be able to help you and your situation. Get a no obligation information kit for Maryland residents →

Maryland Reverse Mortgage Counselors

Prior to taking a completed loan application, seniors must complete a free reverse mortgage counseling session with an approved counselor to ensure that they understand the benefits and drawbacks to a reverse mortgage. Below is a listing of counseling agencies:

Name Agency ID Address Phone Web Site
ROCKVILLE,  MD  20852-1726
(301) 760-7636 http://www.aa-hc.org
ELKTON,  MD  21921-6682
(410) 996-8216 http://www.ccgov.org/dept_housing/index.cfm
BALTIMORE,  MD  21217-3529
(410) 523-1350 http://www.druidheights.com
FREDERICK,  MD  21701-5527
(301) 600-1506 www.cityoffrederick.com/fcaa
BALTIMORE,  MD  21228-4500
(443) 451-1689 http://www.guidewellfs.org
BALTIMORE,  MD  21228-4500
(410) 747-2050 n/a
BEL AIR,  MD  21014-8723
(410) 638-3045 http://www.harfordhousing.org
RIVERDALE,  MD  20737-1054
(301) 891-8400 https://HomeFreeUSA.org
HYATTSVILLE,  MD  20782-2003
(301) 699-3835 www.hiphomes.org
BALTIMORE,  MD  21224-4109
(410) 342-3234 http://www.southeastcdc.org
HAGERSTOWN,  MD  21740-5508
(301) 797-4161 http://www.wccac.org

*This list is updated periodically. It is recommended to check with the HUD website for any other companies.

ReverseMortgageRatings.com does not offer reverse mortgages. ReverseMortgageRatings.com is not a lender or mortgage broker. ReverseMortgageRatings.com is a website that provides information about reverse mortgages and loans and does not offer any loans or reverse mortgages directly or indirectly through any representatives or agents. We do not direct market toward customers. Please contact us if you have any questions. ReverseMortgageRatings.com is not provided by, nor was it approved by the Department of Housing and Urban Development (HUD) or by the Federal Housing Administration (FHA).