Reverse Mortgage FAQs

Direct answers to common homeowner and family questions about title, taxes, insurance, foreclosure, heirs, and counseling.

Reverse Mortgage FAQs
Is a reverse mortgage free money?
No. A reverse mortgage is a loan secured by the home. Interest and fees can be added to the loan balance, and the loan must be repaid when a maturity event occurs.
Do I still own my home?
Borrowers generally keep title to the home, but they must meet loan terms such as occupancy, taxes, insurance, and maintenance.
Can I lose my home with a reverse mortgage?
Yes, foreclosure can occur if loan obligations are not met. Examples can include failing to pay property taxes or homeowners insurance, failing to maintain the property, or no longer occupying the home as required.
Is counseling required?
HUD-approved counseling is required for HECM reverse mortgages.
Can a reverse mortgage pay off my current mortgage?
It may, if eligibility and equity are sufficient. The existing mortgage payoff is part of the transaction and must fit within available proceeds and program rules.
What happens when the borrower dies?
The loan usually becomes due and payable after the borrower dies, sells, moves out, or otherwise triggers a maturity event. Heirs may have options such as selling the home, repaying/refinancing the loan, or allowing the lender to take the property, subject to program rules and timelines.
Are proceeds taxable?
Reverse mortgage proceeds are generally loan proceeds rather than income, but tax and benefits questions should be reviewed with a qualified tax or benefits advisor.
Source Notes
- FTC reverse mortgage guide: https://consumer.ftc.gov/articles/reverse-mortgages
- CFPB Ask CFPB reverse mortgage answers: https://www.consumerfinance.gov/ask-cfpb/search/?selectedfacets=categoryexact:reverse-mortgages

Reviewed by Nick Cunningham, NMLS #907393. Educational content only, not personal financial, legal, tax, or benefits advice.