Reverse Mortgage Buyer's Guide
On February 25, 2026 By newsroom Topic: Buying A House
What is a Reverse Mortgage?
- A loan for homeowners aged 62+ to borrow against home equity without monthly repayments.
- Funds are repaid when the borrower sells the home, moves out, or passes away.
- Payout options: lump sum or recurring payments.
Reverse Mortgage Requirements
- Primary residence ownership.
- Age 62 or older.
- Own the home outright or have a low mortgage balance.
- Keep property taxes, homeowners insurance, and HOA fees up-to-date.
- Maintain the property.
- Undergo HUD-approved counseling (for HECMs).
Types of Reverse Mortgages
- Home Equity Conversion Mortgages (HECMs): Federally insured, most common.
- Proprietary Reverse Mortgages: For high-value homes, privately insured.
- Single-purpose Reverse Mortgages: Restricted to specific uses (e.g., home repairs).
- HECM for Purchase: Combines reverse mortgage with home buying.
Costs to Consider
- Origination Fee: Up to $6,000 depending on home value.
- Appraisal Fee: $300 - $500.
- Closing Costs: Title search, credit checks, etc.
- Ongoing Costs: Interest, annual mortgage insurance premium (0.50%), servicing fees.
How to Get a Reverse Mortgage
- Research: Understand reverse mortgage options and lender offerings.
- Appraisal: Assess your home's current market value.
- Choose a Lender: Opt for FHA-approved lenders for HECMs.
- Counseling: Meet HUD-approved counselors for advice.
- Apply: Provide necessary documents like ID, proof of income, and counseling certificate.
- Closing: Sign the loan, undergo a 3-day rescission period, then receive payments.
Pros and Cons
Pros: - Tax-free funds won't affect retirement income. - No repayments until the loan is due. - Borrowers won't owe more than the home's value.
Cons: - Risk of foreclosure if taxes or insurance lapse. - High upfront costs and reduced inheritance for heirs.
Top-Rated Reverse Mortgage Lenders
- Finance of America Reverse (FAR): Offers jumbo loans, no-origination-fee options, and innovative HomeSafe programs.
- Liberty Reverse Mortgage: Known for transparency, excellent customer service, and easy refinancing.
- Simple Reverse Lending: Provides free calculation tools, personalized proposals, and efficient processes.
Who Should Consider a Reverse Mortgage?
- Seniors with fixed incomes planning to stay in their home.
- Homeowners with sufficient equity and no immediate plans to sell.
Feel free to ask for details on specific lenders or additional advice!
