Reverse Mortgage Pros & Cons: Starting with the Negatives

December 5, 2022 By Michael Branson 54 comments

Pros And Cons of Reverse Mortgages: Exploring the Benefits and Downsides

When used correctly, a reverse mortgage, also known as the Home Equity Conversion Mortgage (HECM), can add stability to your retirement years. However, as with any financial product, it is not always the best program for everyone.

We published this pros and cons guide to help you in making an informed decision about reverse mortgages and assist you in determining if this program is suitable for your long-term retirement goals.

Reverse Mortgage Downsides

#1. Reverse mortgages can have higher closing costs vs traditional mortgages

Reverse mortgages can be expensive loans due to upfront financed origination fees. With the government insured reverse mortgage (HUD HECM) borrowers have both 2% upfront and .50% annual renewal mortgage insurance premiums (MIP) to pay.

Even though not paid out of pocket, the costs can be a substantial downside of the reverse mortgage to homeowners sensitive to closing costs. Many times, borrowers are able to receive lender credits to pay for a portion or a substantial portion of their costs, but this is not always the case. You should always shop around to find the best deal available at the time.

The insurance insures borrowers and lenders against the risk of default but it also ensures that borrowers and their heirs will never have to repay the loan for more than the property is worth, regardless of how high the balance increases or if future property values fall.

Borrowers with homes worth more than the HUD maximum lending limit of $1,089,300 receive no additional benefit for any additional value above that lending limit. Loan amounts are determined as a percentage of the appraised value or the HUD lending limit, whichever is less, so values higher than the maximum lending limit bring borrowers no additional funds under the HUD program.

Therefore, those owning these higher priced homes may prefer a private or proprietary reverse mortgage. These loans are called jumbo reverse mortgages due to being used primarily for higher valued properties. Because these loans are not government insured, they require no mortgage insurance, but the interest rates are higher.

#2. May impact needs based programs

Another possible drawback to a 62 or older borrower with a reverse mortgage can be the accumulation of funds in their account if they rely on needs-based programs such as Medical. Reverse mortgage proceeds are not income, but if borrowers draw funds and allow them to accumulate in their checking/savings accounts, they may nullify their qualification.

Special care must be taken to only draw funds as needed and then be certain they are gone from the borrowers’ accounts prior to month-end when borrowers must supply statements to various entities to receive ongoing benefits.

(Note: Regular Social Security and Medicare are not affected by taking a reverse mortgage.)

#3. Bad actors

Trusting seniors are targets for people looking to use them for bad investments, families with failing businesses, unscrupulous caretakers and others looking to take advantage. Too often when we see reverse mortgage funds lost, it was not the reverse mortgage that failed but the way the money was spent/invested.

#4. Older versions lacked spousal protection

Fortunately, HUD changed its guidelines and unlike loans closed prior to 2015, spouses of reverse mortgage borrowers who are under 62 years of age at the time the loan closes are now protected as an “eligible non-borrowing spouse.” They must also maintain the home in a reasonable manner, pay the property taxes and insurance on time, and live in the home as their primary residence.

Borrowers and spouses must keep in mind that eligible, non-borrowing spouses, are not borrowers on the loan, and as such, they do not have access to any line of credit funds that may still be available after the eligible borrower passes. It is also important to note that non-borrowing spouses are protected in the event of the death of the borrowing spouse.

The loan may still be called due and payable if the borrowing spouse should leave the home for any other reason, so borrowers need to consider this when making their plans and decisions about a reverse mortgage with a spouse who is not yet 62 years of age.

Now for the Pros!

#1. With a reverse mortgage there are no monthly mortgage payments

A reverse mortgage allows eligible borrowers to live the rest of their life in their home with no monthly mortgage payments. Not nearly as much income is needed to qualify for a reverse mortgage as compared to a traditional forward loan. Remember, you and the lender still want to be sure you can maintain future property charges such as taxes and insurance.

#2. You can use funds for virtually anything

Take your funds in a single lump sum payment, flexible line of credit, monthly payments for term or for life, or a combination of these options (i.e., a line of credit to use for home improvements but also a monthly payment for life). Reverse mortgage proceeds are loan funds, therefore they are treated like any other loans and not considered income (check with your tax advisor). You can use the money for any purpose or need you may have.

– Use ARLO’s reverse mortgage calculator to receive an instant quote, eligibility & HECM loan options.

#3. Guaranteed line of credit for life

As long as you have funds left on your line of credit and you meet your obligations, HUD ensures your funds are always available.

Banks have been known to freeze or eliminate HELOC lines of credit without advance notice in the past. They also come to the end of the “draw period” at which time you enter a repayment phase where funds are no longer available, and payments can double or triple when your income may not be as high as when you received your loan.

It is comforting to know this cannot happen with the reverse mortgage line of credit. No matter how long you live in your home, no matter how many payments you take or what happens to the real estate values, you and your heirs will never be required to pay back more than the property’s value to repay the loan in full.

#4. Ability to purchase a new home

You can use a reverse mortgage to not only refinance your existing mortgage, but also to purchase a new home.

This works extremely well for those who:

Want to buy a home.
Need to get a home that will better suit their needs.
Need to lower their expenses.

In the past, seniors purchasing homes were often forced to pay cash for a new home due to their income scenario. Borrowers who did not have the ability to pay cash, did not have cash, or want to use all cash from the sale of their existing home, can now buy their new home using the reverse mortgage without ever having to make a monthly mortgage payment.

This loan works great for seniors seeking homes they may not have been able to consider otherwise. New homes in 55+ developments where prices might have kept them from the home of their dreams if they had to pay 100% cash, are now attainable.

A move that may have been out of the question with a traditional loan, like for those who need to move closer to support systems like needed services, family and friends, can do so with a reverse mortgage.

Reverse Mortgage vs Traditional Loans

	Reverse	Traditional	HELOC
Allows No Monthly Payments	✅	❌	❌
Line of Credit Growth? (Available funds in Line of Credit grow in availability over time.)	✅	❌	❌
Limited Credit Qualifications	✅	❌	❌
Limited Income Qualifications	✅	❌	❌
Flexible Proceeds? (Monthly Payments, Line of Credit, Lump Sum, etc.)	✅	❌	❌
Investment Properties (Reverse Mortgages & HELOC must remain your primary residence.)	❌	✅	❌
Low Closing Cost Options	❌	✅	✅
Assumable?	❌	✅	✅

(Reverse mortgages are not assumable by a family member and is due upon the passing or permanent relocation of the last surviving borrower or eligible non-borrowing spouse.)

Top FAQs

What are the benefits of a reverse mortgage?

With a reverse mortgage you do not have to make any monthly mortgage payments. One of the ways to access the funds is through a line of credit that grows in availability over time. A reverse mortgage loan is a non-recourse loan which means you cannot owe more than the value of the property no matter how long you have the loan in place. Your social security is unaffected by obtaining a reverse mortgage.

What are the drawbacks of a reverse mortgage?

A reverse mortgage will have higher closing costs to obtain than a traditional loan. The property must be your primary residence so you cannot move out or rent the property unless you pay off the loan. A reverse mortgage loan cannot be assumed by your heir and will become due and payable upon the passing of the last surviving borrower or when the property is no longer occupied. Having a reverse mortgage can impact your ability to qualify for or keep certain needs-based products like Medicaid and SSI. With no mortgage payments the balance increases over time.

When is a home equity loan better than a reverse mortgage?

A home equity loan is better if you need short-term financing. An example would be if someone were wanting to borrow a small amount of money to fix up or renovate their property in order to sell it. A reverse mortgage is not suited for short-term financing and is designed to provide long-term solutions for remaining in your home.

Does the bank own the house if I get a reverse mortgage?

No. A reverse mortgage is just a loan and therefore you retain ownership of the property upon entering a reverse mortgage agreement.

Do you need a good credit score to get a reverse mortgage?

No. A reverse mortgage loan does have credit guidelines as all loans do and having good credit improves your chances of getting the loan at the best terms. However, even with less than perfect credit a reverse mortgage can still be obtained. The guidelines do permit extenuating circumstances and a Life Expectancy Set Aside in some instances to overcome derogatory credit.

So, is a reverse mortgage right for you?

It’s important when planning to think long term. Retirement is tricky and people are living longer. If you choose a reverse mortgage now and later decide to move, you might have less available equity for your next purchase.

If your current home is fully accessible and you can stay for the foreseeable future, the reverse mortgage can help fund a more secure retirement. We have seen reverse mortgages do some great things for people who really wanted and needed them.

However, only you, in conjunction with your trusted financial advisor and family, can decide if this is the right loan for you!

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About the Author, Michael G. Branson | Mike@allreverse.com

Michael G. Branson CEO, All Reverse Mortgage, Inc. and moderator of ARLO™ has 40 years of experience in the mortgage banking industry. He has devoted the past 18 years to reverse mortgages exclusively.

54 Comments on this Article

Paul
February 20th, 2022

Can I get a second mortgage after getting a reverse mortgage?
Reply to Paul
- ARLO™
  February 22nd, 2022
  
  Hello Paul,
  
  There is no restriction against secondary financing from the reverse mortgage loan.
  However, because the balance of the reverse mortgage grows as you borrow funds and make no payments on the loan, most lenders are hesitant to place additional loans behind reverse mortgages.
  If you do find a lender though, the terms of the reverse mortgage do not prohibit the financing.
  Reply to ARLO
- Joe
  March 18th, 2022
  
  If you get a reverse mortgage and you're on Social Security disability, will Social Security be able to deduct my monthly money they give me?
  Reply to Joe
  - ARLO™
    March 22nd, 2022
    
    Hello Joe,
    
    The reverse mortgage is a loan and the proceeds are borrowed funds. I am not aware of any loan programs that Social Security can go and take funds, in other words, borrow them in your name. If so, they would be able to take advances from your credit cards and charge them to you. However, I do not know what options they have after you take a draw and put it in your bank account.
    For answers to questions like that, you really need to speak to the program administrators to see what access they have to your bank account. If, for instance, they can deduct money from your account if you have more than a certain amount in the account at the end of the month, you need to never draw more funds than you need for that month and be sure to spend them before the end of the month so that your ending balance is back down to the level where you do not risk having the program withdraw funds.
    But you need to be sure you understand how the program works and keep your bank balances in check so that you do not borrow funds on the reverse mortgage only to have them accessed or put your eligibility for the program in jeopardy.
    Reply to ARLO
Ellzora H.
November 2nd, 2020

I have $100,000K in equity, loan mortgage balance of $200,000, age 71, Not concerned with heirs payouts. What are the pros and cons for me? Would like to rent in 5 years.
Reply to Ellzora
- ARLO™
  November 2nd, 2020
  
  Hello Ellzora,
  
  Without knowing your location, I can tell you that you are about $39,000 -$42,000 short of the amount you would need to close the loan. This means that this is the amount of money that you would need to bring in to closing just to close the loan.
  That is a large chunk of money.
  If you plan to sell the home and rent within the next 5 years anyway, I would not recommend the loan for you as the costs are anywhere from $14,000 to $17,000 depending on the closing costs were you live.
  This loan is intended to be the last loan you will ever need and it you are not planning on staying in the home, I would not suggest it for a temporary option.
  You would still have equity in the home in the next 5 years but not as much due to the accruing interest.
  The loan would eliminate your payments in the meantime, but you may wish to look at renting sooner and keeping more of your equity for that option if that is your ultimate goal anyway (not to mention saving the fees).
  Reply to ARLO
Rhonda N.
October 26th, 2020

After reading ARLO's pros/cons, a lot of the questions seem to ask about glitches or hiccups to the terms of the reverse mortgage for the person, spouse or couple involved. Which now I see why there's counseling required.

Under the current rules/ guidelines what is the best case or ideal scenario for a married couple in Florida for having a successful completion of a reverse mortgage should they get one. Please include a scenario of the passing of one or the other spouse so I can get a realistic picture. My husband and I are both over 62 yrs. of age and are considering this as an option for us.
Reply to Rhonda
- ARLO™
  October 26th, 2020
  
  Hello Rhonda,
  
  If both spouses are over 62 and both are on title and on the loan, there really is no glitch.
  Both or either can live in the home for life if you continue to pay the taxes, insurance and any other assessments (i.e. HOA dues) on the home when they become due.
  Just like any loan on real estate, there are terms in the loan that if you fail to pay these items, the lender could ultimately call the loan due and payable and require you to pay the loan off since that would endanger the lender's security in the property.
  But as I said, that is true with all loans not just reverse mortgages.
  Other than that, if at least one person from the original loan remains living in the home and is still on title, the loan will remain open, even if you have used all your proceeds.
  There would be no changes if one spouse passes before the other.
  Reply to ARLO
Anita J.
October 12th, 2020

Is it possible to buy back my reverse mortgage?
Reply to Anita
- ARLO™
  October 12th, 2020
  
  Hello Anita,
  
  There is never a prepayment penalty on a reverse mortgage.
  It is like any other loan, you can refinance it, pay it off with other funds available to you or you can sell the home and pay off the loan at any time without penalty.
  Or you can choose to begin making payments of any amount you choose at any interval you choose at any time.
  If you would like, you can pay off the loan all at one time or you can begin making payments in any amount to pay the loan down or off.
  
  There is no "buying the loan back", you own the home and always have. You just have a loan against the property, and you can pay it off or sell the home any time you wish -just like any other loan.
  The only difference is that there is no payment due on a reverse mortgage so if you make no payments, your balance will increase over time.
  But you can make any payment at any time you choose so you can choose to pay just the interest that accrues to keep the balance from rising, pay more than the interest and mortgage insurance to begin to pay the balance down or pay the loan off at any time as well.
  And since there is no due date for any payment, you can pay any amount at any time you wish.
  It really is the most flexible loan available!
  Reply to ARLO
  - Deb
    March 31st, 2021
    
    Is the interest compounded if you choose to make payments on the loan?
    Reply to Deb
    - ARLO™
      April 7th, 2021
      
      Hi Deb,
      
      It's hard for me to answer this without sounding like I am hedging but the interest is always accruing on the outstanding balance.
      If you make payments on the loan and reduce the balance, you do not pay interest on the balance you no longer owe but any remaining balance will accrue interest just as any other loan.
      Compounding interest happens when you accrue interest on the interest that you accrued and did not pay. If you make payments that cover or more than cover the interest that accrued, then there is no compounding.
      The beauty of a reverse mortgage is that there are no set payments giving borrowers total freedom to choose if they want to make a payment or not, if they do, how much or when. All this information would go toward determining interest accrual and the amount that would accrue based on when paid.
      
      If you wanted to stop interest from accruing, you could make sure that you paid a minimum of the interest that accrued each month (that alone would not stop the balance from rising though as you cannot forget the monthly mortgage insurance premium).
      If you wanted the balance to remain stable, you would need to include both the interest and monthly mortgage insurance cost. If you wanted to start a positive amortization of the loan (start reducing the balance owed), you would want to pay an amount more than the interest that is accruing and the mortgage insurance premium each month.
      We give borrowers who have this goal an amortization calculator that we developed that allows them to run "what if" scenarios so they can see how their balance would be affected by making various withdrawals from the line as well as repayments.
      If your goal is to make payments on the loan, the amortizations schedule helps borrowers track their progress.
      Reply to ARLO
Aldo R.
November 11th, 2019

Need advice. My mother took out 40k reverse mortgage loan and now owes roughly $170k. Home value has gone up because neighbor is now considered historical district and because of all the mass building. I would like to keep her reverse mortgage from increasing so I can maybe take out a refi and use my equity to pay it off. I'm the only stable son and I don't want my addicted brothers who don't work to benefit from this.
Reply to Aldo
- ARLO™
  November 11th, 2019
  
  Hello Aldo,
  Keeping the balance from rising is easy. You can make payments in any amount at any time from interest only which would keep the balance from rising, to any amount greater than interest only which would cause the balance to begin to fall.
  The thing about which I cannot advise you is the heirship. This depends on your mom and the laws of the state in which the property is located. I would suggest you sit down with mom and tell her your concerns and see if she shares your sentiments.
  After all, mom may even agree with you that your brothers have issues, but she may not be ready to cut them out of ownership of the home and you should know this before you begin allocating your assets.
  If she agrees, you should contact an estate attorney in your area who will be able to advice you regarding heirship rights and what mom needs to do to direct the ownership of the home to you after her passing.
  What you ultimately do is up to you but if I had the same concerns as you, I don't think I would start making payments on the loan until I knew that I was protected so that when the time came that mom passed and siblings with drug problems were not getting a portion of the equity realized from the payments I made.
  Another reason why talking to mom and getting her to agree now and consulting with an attorney is important.
  Reply to ARLO
Nancy N.
November 4th, 2019

My husband and I are separating. I want to give him the house. How do I get my name off of the Reverse Mortgage Loan?
Reply to Nancy
Pam F.
August 15th, 2019

Thank you for providing insight on both the advantages as well as disadvantages, it is very helpful. I have a friend in Florida who owns two homes. He lives in one and has retained the other four investment purposes i.e. allowing someone to rent it. He's currently living on what was left to him by his family with no other source of income. I have told him to pick a house and live there and sell the other. This way, he would generate enough resources to be stable until he passes. He is 68 years old. If he chooses not to do that, can he take a reverse mortgage on either one or both properties? He is not married. Has no children. He has squandered a lot of what was left to him by his family on extraneous things. I'm a little concerned as to whether he's going to have what he needs to make it without some sort of regular monthly income. Does this type of circumstance generally qualify someone for a reverse mortgage? If so, what is best?
Reply to Pam
- ARLO™
  August 15th, 2019
  
  Hello Pam,
  
  He can only take one reverse mortgage and it can only be on the property in which he lives as his primary residence.
  If he were to try to use the property that he did not occupy as his primary home and the lender completed an occupancy inspection or otherwise became aware of the situation, they would call the loan due and payable and he would run the risk of losing the home to foreclosure if he could not afford to repay the obligation.
  If the rental income from the rental property combined with the reverse mortgage on his primary residence is not adequate to meet his needs, I would not recommend the loan for him under the circumstances.
  A financial advisor may be a great benefit for him, and he may have to consider the sale of one or both properties and then a lifestyle that would fit within his means.
  A reverse mortgage may or may not be part of the plan but if he is not living comfortably even with the reverse mortgage, living off the equity for a while only to still find yourself in financial difficulty later when you have even less equity to work with is not the answer.
  Reply to ARLO
Zizine
August 12th, 2019

Hi Arlo, I have a question. I am 75 and live with my husband of 40 years. We are divorced and he is very sick needing 4 different surgeries. Because our house is needing remodeling so we may live in it, instead of in a building in the backyard, we're thinking reverse mortgage and whomever lasts will live in it until we depart this world. We have no children you see.

My question really is "Can you tell me what my indebtedness could possibly be?" I have no mortgage and my house's worth $90k+ but $35k would take care of the remodeling. I understand I do not have to repay this loan since the house would be the bank's after our death. But I do expect the bank would put some do and don'ts to keep up the usual maintenance monthly and yearly expenses. Since I am a novice in understanding this stuff, please tell me, what are our risks with reverse mortgage? I am quite uneasy about it. Thank you.
Reply to Zizine
- ARLO™
  August 12th, 2019
  
  Good Afternoon,
  
  The property would have to meet HUD minimum standards to be eligible for the loan. If not, you would know what it was lacking by the underwriter's review of the appraisal.
  If it did or if you brought it up to those minimum standards if it did not at time of appraisal, then you would be responsible for taxes and insurance annually to be paid in a timely manner, any other assessments (such as Homeowner's Dues if applicable) and you would have to maintain the home in reasonable manner.
  A reasonable manner means that the home is in good repair and the city is not posting notices that your pool is so bad it is breeding mosquitos, or the landscaping is growing out of control, etc.
  
  Other "do's and don'ts" are that you must occupy the home as your primary residence. You cannot leave the home for excessive periods of time and still call it your primary residence.
  Even leave for more than 12 months and you plan to be returning and it is a "temporary absence" due to medical, etc., more than 12 months is considered a permanent move and the loan would become due and payable under the terms of the loan. Other than that, all you must do is live there and never make a payment on the loan for as long as at least one of you remains in the property.
  
  About the amounts you could receive, it varies depending on borrowers' ages, property value, the area of the country where you live and the costs there and interest rates.
  Rates are very favorable right now and I would encourage you to visit our interest rates page to see what you might expect to receive given your circumstances. The amount you would owe would depend on how fast you borrowed the funds (with a line of credit you can take the funds early on in the loan or slowly along the way and the slower you take the draws, the slower the interest owed will accrue).
  Reply to ARLO
Norma O.
August 12th, 2019

Can I put my granddaughter on the title if I have a reverse mortgage? We will be paying the mortgage down and I want the house to belong to her.
Reply to Norma
- ARLO™
  August 12th, 2019
  
  Hello Norma,
  
  You sure can. You can add anyone to title that you want after the loan closes and it does not affect your mortgage if at least one of the original borrowers remains on title and living in the property.
  Remember though that the loan will still become due and payable when the last original borrower no longer lives in the property which means that she will need to refinance any balance still owing at that time with a new loan or she would have to sell the home.
  
  I also recommend that borrowers in this case contact their lender and sign an authorization in advance allowing their chosen heir to contact the lender and for the lender to give them any and all information available on the loan.
  Many times, lenders must wait for the title to pass and that means a probate in some cases before they can work with heirs due to financial privacy laws and if they have an authorization in advance, that is a huge help.
  Lenders do not know who rightful heirs will be and will not be placing into the middle of a family squabble if heirs dispute ownership and the authorization may help intended heirs get information but will not help title issues.
  It might really be worth your time and effort to seek the advice of an estate attorney in your area to look into estate planning as trusts and other instruments that allow for the immediate or semi-immediate passing of title to a substitute trustee can sometimes greatly reduce the time and hassle for heirs.
  It is much easier to direct your affairs now while you are still here to make your wishes known and can sign any legal documents required than later when you are gone. Estate attorneys can tell you the best ways to make sure that your wishes are known and followed based on the laws of your state.
  Reply to ARLO
Susan W.
July 29th, 2019

I have a question regarding the value of the home. Under "Advantages" is this statement: "Loan is Non-Recourse (Can never be made to pay more than the value of the property at maturity)"
If we need to leave the home and pay off the reverse mortgage, is "value" the appraised value, or the unrealistic 4% appreciation each year on the home's original appraised value that I've seen on some estimates?
We received an estimate on getting a reverse mortgage and the 4% appreciation on the home's value each year caught my eye. In this real estate market right now that's not very likely to happen.
In other words, what if, at the time the reverse is taken out the appraised value is $500,000, but the housing market tanks and now the home is only appraised at $250,000 and the principal amount now owed is more than $250,000. How is this handled with a reverse mortgage?
Thanks in advance for your answer.
Reply to Susan
- ARLO™
  August 3rd, 2019
  
  Hello Susan,
  
  The 4% used in the Loan Comparison is for illustrative purposes only. It has no bearing on any actual numbers and only servers as an estimate. Many homes see a higher appreciation rate and some never see any appreciation. Using an amortization schedule, your lender can alter that number to 2% or 0% on the at the time they run the comparisons if you would like to see what the numbers look like under other circumstances but they will not use a higher appreciation rate as they do not want to give you excessive expectations.
  
  The value of your home is set by the market, not your estimates. There is no way the lender or anyone now can say what your home will be worth in 5 or 10 years as the market (people who are buying homes at that time) will dictate what they are willing to pay for homes like yours.
  So, your home's value will be determined by the same thing it always has -the amount a knowledgeable buyer is willing to pay for a similar home in your area. If that value is less than what you owe due to falling values since you obtained your loan, etc., you and your heirs have the comfort in the knowledge that the loan is a non-recourse loan. In other words, the lender has only the property for security and can look to no other assets from your estate or your heirs to retire the debt.
  If your balance rises to $500,000 and the value of the home is only $250,000 at the time you pass, your heirs have the option of keeping the home and paying the loan in full at the amount owed or 95% of the current market value, whichever is less (in this case that would be $237,500) or they can walk away and let the lender take the home and owe nothing.
  Reply to ARLO
Gail P.
July 25th, 2019

Hi Mike,
My question is may I get a reverse mortgage if I am 71 years old and my daughter (Co-owner of house) is 44 years old? She is living in home, and I want to buy home in Florida?
Reply to Gail
- ARLO™
  July 29th, 2019
  
  Hello Gail,
  Yes, you can but you need to know that there are possible repercussions for doing so with an underaged co-owner who is not a spouse. If your daughter agrees to the loan, she would be considered a non-eligible non-borrowing co-owner of the home.
  Prior to HUD's final rule in 2017, this distinction didn't even exist. Prior to then, any co-owners who were not eligible for the loan were forced to Deed off title for the reverse mortgage to go through. Now they can remain on title, but they are still not on the loan and they must agree to the loan terms. The loan terms state that when the time comes that you, the eligible borrower, are no longer living in the home as your primary residence the loan becomes due and payable.
  This means when you pass or must move out of the home permanently, the loan becomes due and your daughter would be forced to repay the entire balance owing at that time, sell the home or could face foreclosure.
  The tough part about this is that if your daughter is not able to refinance the property with a new loan in her name at that time, she would be forced to sell the property (if her income and credit are good, she can always refinance the property at that time).
  This may not be an issue if there is a lot of equity and she can move elsewhere at that time but if she has no income and cannot qualify for another loan or there is no equity in the home, there may be no money for her to move with as a result of the sale.
  If you are both good about saving while there are no payments due on the home, she may have a great nest egg by that time but then again, it might become a hardship for her.
  Or if she owns another home she can move to at that time, it might also not be an issue but you need to be aware of this coming requirement and be sure you are ready for it when the time comes or possibly rethink the reverse mortgage for your circumstances if you think this would put your daughter in peril later.
  Reply to ARLO
Wanda
July 21st, 2019

We are interested in doing a reverse mortgage, and want to know if it's possible to be in the house 7 to 8 months to travel, the other months, and if so can we rent it out so it's not vacant.
Reply to Wanda
- ARLO™
  July 21st, 2019
  
  Hello Wanda,
  
  If you are out traveling 4 to 5 months out of each year, you meet the definition of the home being your primary residence because it is your residence for over half the year.
  However, if that 4 -5 month stretch is all at one time, then you would want to be sure to communicate with your lender so that they are aware that you are not vacating the home and that the travel is temporary and within the terms of your loan.
  However, when you say that you want to rent the home out, this begins to get a little touchy. If you have a person who lives in the home with you (i.e. rents a room from you), that is perfectly acceptable as HUD allows this arrangement. However, transient use of the property is not allowed.
  If you are talking about renting the home out for short periods of time when you travel only, that becomes more like an Airbnb type of arrangement and that is not allowed by HUD. That's more of a commercial use of the property and is not allowed pursuant to the loan documents.
  Reply to ARLO
Roy C.
May 29th, 2019

I was turned down for credit issues, but I thought reverse mortgages didn't require credit. What gives?
Reply to Roy
- ARLO™
  May 29th, 2019
  
  Hi Roy,
  
  HUD instituted Financial Assessment Guidelines in 2014 and while the credit and income requirements are not as strict as they are for forward loans, they do underwrite borrowers for general soundness in credit and income requirements since that time.
  The look particularly hard at past property charge payments as well as overall willingness to pay your obligations even though there is no minimum credit score requirement. They also require borrowers to show that they have a minimum amount of income left after payment of all obligations to live on each month based on family size.
  If you are not sure why you did not qualify, it might benefit you to check with another lender, not all lenders compute income exactly alike, etc. I would be completely open with your next lender/originator of choice about what happened this time so that they can work with you if possible, to get the loan approved.
  Reply to ARLO
Donna G.
May 20th, 2019

How can I access my quote once I'm on the website?
Reply to Donna
- ARLO™
  May 20th, 2019
  
  Hi Donna,
  The information regarding your quotes are all available immediately after you input a small amount of information needed to run the calculations.
  You have a choice at that time to view the quotes as several options, the most money, the lowest interest, payments, line of credit, lump sum, etc. you can also view comparisons.
  If you are having any problems or would like any more information, don't hesitate to contact us and we will still honor your wishes for whatever level of service and contact you prefer.
  Reply to ARLO
Taylor B.
April 22nd, 2019

I wanted to thank you for helping me learn more about reverse mortgages. It's good to know that there aren't any monthly payments as long as you maintain your property taxes. It sounds important to be very financially aware especially if it affects your mortgage payments.
Reply to Taylor
Cindy
March 26th, 2019

Sister and I were left our mother's home and she wants to take out a reverse mortgage to buy me out, can she do that if I don't agree?
Reply to Cindy
- ARLO™
  March 26th, 2019
  
  Hello Cindy,
  
  No borrower can take out a loan on a property without the consent of all property owners. The lender would not have full security if they could not exercise the terms of the security agreement which would be the case if all owners did not agree to its terms.
  However, if you are going to come off title anyway, you should speak with an attorney about transferring your interest in the home to her in advance and taking back a loan on the property to protect your interest. I believe an attorney would structure the transaction to where you would not have to be involved in the loan in any way, you would be assured of payment in full when the reverse mortgage closed, and all would be happy.
  If you don't want to sell your half of the property, that obviously would not work and that would be up to you and your sister to determine but no, she cannot take out a reverse mortgage as long as you are also on title to the property if you do not agree to it.
  Reply to ARLO
Cathy
June 10th, 2018

My husband turns 62 next year and I am 2 years after that. We are considering a reverse mortgage. We live near a university and would like to know what would happen if we got the reverse mortgage and then the college decided they wanted to buy our property.
Reply to Cathy
Wilf H.
April 26th, 2018

My wife and I are both over 65 (I am 70 and she is 68). We own a home that is mortgage free. We want to build a new home, move into it and rent out our existing home. We have been told that we can get a reverse mortgage on our existing home, but that if we move out, we will have to pay out that mortgage immediately, and that we cannot get a reverse mortgage on the new home until we have lived in it for six months. Is there a way to get a reverse mortgage on the new home immediately as it is being built, or as soon as it is completed? Also, what would the cost of obtaining a reverse mortgage be?
Reply to Wilf
- ARLO™
  April 28th, 2018
  
  Hi Wilf,
  
  It is true that if you get the reverse mortgage on your current home and then move out, the loan would become due and payable at that time. However, there is not a 6 month occupancy requirement before you can get a reverse mortgage if you purchase a new home.
  It is a little bit tricky with a home you build though in that the final certificate of occupancy must be issued and you must have moved your permanent place or residency to the new home before it is eligible. The cost to get the new home varies based on where the property is located, rates at the time, the value of the home and the value of the loans at the time.
  Reply to ARLO
Nancy
March 30th, 2018

I have been told if I get a reverse mortgage, i will receive $6,500 at closing and can draw $12,000 at the start of the next year. They pay off current mortgage of $36,000. Value of home is $130,000. Am I allowed any draws after these?
Reply to Nancy
Marty
June 28th, 2017

My parents are both 89. They just moved into assisted living but don't have enough retirement income to pay for their monthly costs. They own a home with a property tax value of $230,000. Their remaining mortgage is $75,000. My wife and I have been living in the house and taking care of my parents. We will continue to live in the house as our primary residence. We are trying to figure out the best way to fund their time at assisted living. Initially we thought that a simple line of credit based on their equity in the house would be good but after talking to bankers we are not quite sure. Do you think the HUD Reverse Mortgage discussed above would be a good solution? My parents have no other assets or debts.
Reply to Marty
- ARLO™
  June 28th, 2017
  
  Hi Marty,
  A reverse mortgage is not a viable solution in your case based on the information you have given me. Your parents have already moved to assisted living and to be eligible for the reverse mortgage, they would have to be living in the home as their primary residence.
  Reply to ARLO
Andrea B.
August 17th, 2016

My parents are 84 years old and in relative good health. They currently have a reverse mortgage for approximately $100,000. However, they want to get out of that obligation because of the high fees that they are incurring. Can a reverse mortgage be refinanced to a traditional mortgage?
Reply to Andrea
- ARLO™
  August 17th, 2016
  
  Hi Andrea,
  
  There is never a prepayment penalty with a reverse mortgage so your parents can make a payment of any amount up to and including payment in full at any time on their loan. Although there is never a payment due on the loan, they can choose to pay it back in payments, or they can pay it off with a refinance of a new loan if they so choose.
  Reply to ARLO
Glenda N.
August 21st, 2014

I have an elderly friend who took a reverse mortgage on her home. Now after several years and some health issues, she has decided she wants to move to her hometown and be closer to her children. What are her options with the house? Does she have to return the money? Can she sell it; or does it revert to the loan company? She is a bit confused.
Reply to Glenda
- ARLO™
  August 22nd, 2014
  
  Hi Glenda,
  Your friend has all the same rights of home ownership she always had. The terms of the reverse mortgage are that there are never any payments due if she lives in the home. If she chooses to move or sell the home, then the loan would become due at that time, but she has that right as well. Like any loan, she does have to pay the loan back when she sells the property, but any equity she has in the home still belongs to her.
  She should contact a local real estate professional and determine the probable value of the home, compare that to the current statement to figure out her equity position (don't forget there will be costs incurred in the sale). If she wants to continue, then the next step would be to make the decision what she wanted to do and if selling is her choice, then the payoff would be handled through the closing just like any other transaction.
  Reply to ARLO
  - Darlene
    December 17th, 2016
    
    Hello Mike,
    
    Could you clarify, if the homeowner/heirs pay-off, refinance or sell the home, this covers the initial mortgage. What happens in regards to spent and unspent equity funds?
    Reply to Darlene
    - ARLO™
      December 18th, 2016
      
      Hi Darlene ,Â
      I'm not sure I totally understand your question so forgive me if I miss with my answer but I'll do my best. Â when the loan is paid off, that includes all funds drawn and the interest that has accrued on this email funds, including original Â and all subsequent draws. Â if you had more money available on the line, but it was never borrowed, it is not owed. Â it's like a credit card that has a $10,000 limit but you only owe $5,000 on it and want to pay it off. Â You only pay off the $5,000 balance and you don't owe the other $5,000 that you never borrowed so it doesn't affect the payoff.
      The reverse mortgage is the same in that respect. Â If you never borrowed the funds, you and your heirs don't have to pay them back. Â And like any other line of credit, unborrowed Â funds are not an asset either so there is no payout as there would be if you were closing a bank account. Â Hope this helps.
      Reply to ARLO
Barbara
May 1st, 2013

Hello Mike,

Can I get a reversed mortgage on my home if I currently have an interest only mortgage?
Reply to Barbara
- ARLO™
  May 3rd, 2013
  
  Hi Barbara,
  You absolutely can! Since the existing loan would have to be paid in full with the reverse mortgage proceeds and would no longer be on the property anyway, it really does not matter what type of loan it was. There are some prohibitions on paying off seller financing on newly purchased homes, but even then, there is no restriction on the type of loan that the seller carried back - an interest only loan is acceptable.
  Reply to ARLO
Carolyn
March 9th, 2013

My house is valued at 300,000. I am 64 years old. I am considering a Reverse Mortgage. I have no mortgage on it. I would like to know how much I could borrow and what would the cost be. Also, I would like to see a loan schedule that shows how the Reverse Mortgage operates compared to a Forward mortage.
Reply to Carolyn
- ARLO™
  March 20th, 2013
  
  Hi Carolyn,
  There are several different ways you can take your funds -lump sum, monthly payment, line of credit you can draw from when you want or a combination of all of these. Also, different parts of the country have different closing costs and some states' costs are much higher than others. Also, it is important to know the month and year of your birth, if you will be 65 within 180 days of the anticipated close of the loan, you would receive higher benefits than someone who just turned 64.
  Reply to ARLO
Laura
July 28th, 2012

Can my adult son continue to live with me and help with expenses if I have a reverse mortgage?
Reply to Laura
- ARLO™
  July 31st, 2012
  
  Hello Laura,
  Yes. As long as you are living in your home as your primary residence and maintaining taxes and insurance. There are no restrictions with your home ownership rights.
  Reply to ARLO
Ashley
July 26th, 2012

Hi Michael, My mother in law wants to get a reverse mortgage on the home that she owns outright. She is 76 years old. Her husband owns a home in another state (Florida, he owned it before they were married) she is not on the deed. They are living seperate and her home has been paid for in cash and he is not on the deed. Can she get a reverse mortgage without him having to sign on the mortgage even though they are technically married?
Reply to Ashley
- ARLO™
  July 26th, 2012
  
  There would be no problems with this at all. As a matter of fact, we sometimes have married couples who are both on title and do live in the same home drop one spouse for one reason or another and do the loan in just one spouse's name. While we do not recommend dropping spouses from title just for qualification purposes since the loan becomes due and payable when the last borrower on the loan permanently leaves the home, this would not be the case with your mother in law as her spouse already has another property in which he would live if/when she passed should that occur before him.
  Reply to ARLO

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