Like many of our readers who are navigating retirement, you might wonder if a reverse mortgage is right for you.  You’ve likely seen your equity grow substantially, possibly even owning your home outright – a common scenario for many baby boomers.

Your home, often your largest asset, may lead you to consider the option of a reverse mortgage.  At All Reverse Mortgage, we understand the importance of this decision.  This article integrates our insights with 3 important questions, helping you evaluate whether a reverse mortgage fits your financial future.

We’ll guide you through understanding the pros and cons of a reverse mortgage, ensuring you make a choice that aligns with your retirement goals and financial stability.

ARLO asks if a Reverse Mortgage is right for you with pros and cons checklist

Ask yourself these three important questions to determine if a reverse mortgage is right for you:

1.  Do you wish to stay in your home?

This is the most important question to ask yourself if you are considering getting a reverse mortgage versus putting your house on the market.  If you don’t plan to stay in your home, or if you don’t plan to be there for the long term – a reverse mortgage may not be the right option.

If, like most Americans, you wish to remain in your home while you age, this type of loan, designed expressly for aging in place, is an option to consider.

2.  How equipped is your home for your needs?

A borrower can use reverse mortgage proceeds however they choose.  Some borrowers use their proceeds to make home improvements or modifications so that the home is better suited for aging in place.

Some changes to consider may be:

  • Wheelchair-accessible ramps or chair lifts
  • Wider door frames
  • Adding additional lighting
  • Living quarters on the main floor
  • Door pulls and handrails for easier access

Changing your home to meet your living standards through a reverse mortgage could allow you to remain in your home rather than move into a new residence.

Deciding where to live in retirement and whether you will move away from the home where your family has lived for years is a significant decision, as is taking out a loan to help you meet your financial needs in retirement.

3.  Do you meet the minimum qualifications?

To qualify for a reverse mortgage, you must be 62 and have substantial home equity.  To get a reverse mortgage, all existing loans on the home must be paid off.  Borrowers can use loan proceeds to pay off the existing mortgage and then receive any remaining proceeds through a lump sum, term or tenure payments, or as a line of credit.

Selling may be an option for you, but the recent housing crash has left many homeowners with less home value than they had five years ago.  Getting a reverse mortgage with the potential to increase cash flow could be a viable alternative to selling at a loss.

Reverse Mortgage Suitability Checklist

Suitability FactorsGood Fit for Reverse MortgagePoor Fit for Reverse Mortgage
Age and Home EquityOlder homeowners with significant home equitySeniors with little equity
Long-term PlanPlans to stay in the home for many yearsPlans to move or sell the home soon
Financial SituationNeed for additional income, with limited cash flow optionsStable income sources that cover living expenses
Legacy ConcernsLess concerned about leaving home equity to heirsWants to preserve maximum home equity for heirs
Maintenance and ExpensesAble to maintain home and keep up with property-related expensesDifficulty in maintaining home or paying property taxes and insurance
This table outlines factors like age, long-term plans, financial situation, legacy concerns, and ability to maintain the property. For each factor, it describes scenarios where a reverse mortgage might be a good or poor fit. This format helps individuals evaluate their circumstances in relation to the typical suitability criteria for reverse mortgages.

Suitability FAQs


How do I know if the reverse mortgage will work for me?

The reverse mortgage is an outstanding loan, but that doesn’t mean it works for everyone, depending on their situation.  The answer to whether a reverse mortgage will work for you will vary from person to person, depending on their circumstances.  Ultimately a homeowner needs to assess where they are at in life regarding finances and expenses, where they want to live during their retirement years or for the foreseeable future, what the best-case scenario and worst-case scenario of the options they have, and then find out if the reverse mortgage can help them accomplish those goals.

Are there any alternatives to a reverse mortgage?

Yes and No.  A conventional mortgage is an alternative to the reverse mortgage that a homeowner can look at to do a cash-out refinance.  However, that will come with a mandatory monthly mortgage payment due every single month.  The reverse mortgage is the only loan that requires no monthly mortgage payments.  If a homeowner wants to get out of their current mortgage, an alternative to the reverse mortgage is to sell their current home.  The downside to selling your current home is that you have to live somewhere and assess what you can afford to buy once you sell your current home if you do not consider the reverse mortgage.

What if I do not want to stay living in my current home?

This is a significant factor in determining whether to get a reverse mortgage or consider an alternative option.  If you want to sell your current home, the reverse mortgage may not be a good option for you on your current home.  However, a reverse mortgage can be used to purchase a new home, so many times, homeowners who do not wish to stay in their current home will sell that home and then use the reverse mortgage to buy their next property to allow them to maximize their assets rather than having to buy a home outright for cash and depleting those assets.

Can you lose your house with a reverse mortgage?

Yes.  When you have a reverse mortgage, you, as the homeowner, must pay your property taxes, maintain adequate homeowner’s insurance, and occupy the property as your primary residence.  Failure to meet these requirements could result in the loan being called due and payable.  While there are no monthly mortgage payments you can default on, there are other ways to default on a reverse mortgage.

How long can I stay in my house if I get a reverse mortgage?

When you get a reverse mortgage on your home, you can stay there for as long as you live in the property as your primary residence and maintain the home’s taxes, insurance, and upkeep.  If all these requirements are met, you can live in the home for the rest of your life, no matter how long that is, without making a mortgage payment.

How to get the most out of a reverse mortgage?

The homeowners who get the most out of a reverse mortgage are those borrowers who owe very little or nothing on their home at the time of seeking a reverse mortgage loan.  The higher the equity position in the home, the more proceeds a borrower will have.  Any existing mortgage(s) or lien(s) must be paid off when obtaining a reverse mortgage loan.  Additionally, the lower the interest rate obtained on the reverse mortgage, the more a borrower will receive.  Since the current interest rates in effect at the time of application play a direct role in the loan-to-value a borrower will receive, it is beneficial for homeowners seeking a reverse mortgage to try and get as low an interest rate as possible.
Important Considerations on Reverse Mortgages

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