Consider the role of home equity
Could a reverse mortgage fit my retirement plans?
A reverse mortgage lets eligible homeowners borrow against home equity. The FHA-insured Home Equity Conversion Mortgage, or HECM, is available to eligible homeowners age 62 or older who meet equity, occupancy, financial assessment, and counseling requirements. Required monthly principal-and-interest payments are generally replaced by repayment when the loan becomes due, often after the home is sold or no longer the borrower's principal residence. Interest and fees typically add to the balance over time. You still pay property charges and maintain the home. A useful review compares the cash available with costs, future housing plans, and the effect on your spouse or heirs, alongside alternatives such as keeping your current loan or downsizing.
Talk through my optionsWhat to think through
- You remain responsible for property taxes, homeowners insurance, maintenance, and principal-residence requirements. Failing to meet loan obligations can lead to foreclosure.
- Borrowing reduces the equity available for other needs or your estate. Compare projected balances and costs at several points in your retirement.
- HECM borrowers complete counseling with a HUD-approved agency. Use that conversation to understand alternatives, payout choices, and the obligations you would accept.
- Discuss the position of any spouse or other household member, and what would happen after a move, extended absence, or death.
What to bring to a conversation
- Current mortgage and lien statements, plus an estimate of the home's value.
- Property tax, homeowners insurance, and any HOA information for the ongoing budget.
- Income, asset, and debt records needed for the lender's financial assessment.
- Your housing plans, household details, and questions about future cash needs or heirs.
Go to the source
Program details vary. Use these resources to explore the questions, then verify current requirements with your advisor.
CFPB: HECM eligibility CFPB: Reverse mortgage costs and counseling CFPB: Ongoing homeowner responsibilitiesEducational information, not a loan offer or eligibility determination. No result is guaranteed.