Myth or Fact – Will I Lose My Home with a Reverse Mortgage?

Reverse Mortgage Myth: You can lose your home with a Reverse Mortgage

Reverse Mortgage Fact: No, you cannot lose your home unless you default on loan terms, just like a forward mortgage

Having a reverse mortgage is no different than having a regular mortgage on your home. The same rules apply to both types of loans. 

While a reverse mortgage allows you to stay in your home, it’s important to understand that there are circumstances where you could lose it. Here’s a breakdown:   

Situations Where You Could Lose Your Home:

• • Failure to Pay Property Taxes and Homeowners Insurance:

• • • • Even with a reverse mortgage, you are responsible for these ongoing costs. Failure to pay them can lead to foreclosure.   

• • Failure to Maintain the Home:

• • • • You must keep your home in reasonable condition. Significant neglect or disrepair can result in the lender calling the loan due.   

• • Not Living in the Home as Your Primary Residence:

• • • Reverse mortgages are designed for your primary residence. If you move out permanently, the loan becomes due.   

Key Points to Remember:

• • You retain ownership: A reverse mortgage is a loan, not a transfer of ownership.   
  • Responsibilities remain: You are still responsible for taxes, insurance, and maintenance.   
  • Loan becomes due: The loan typically becomes due when you move, sell the home, or pass away.   

In essence:

• • As long as you adhere to the loan terms, maintain your home, and keep up with property taxes and insurance, you can generally remain in your home.   
  • However, failing to meet these obligations can lead to foreclosure.  

Reverse mortgages can be a useful financial tool for eligible seniors looking to supplement income, pay for healthcare, or cover living expenses, but they also come with complexities that should be thoroughly understood before proceeding.

Learn more about eligibility requirements for a reverse mortgage, situations where a reverse mortgage is best used, and common myths around reverse mortgage that we debunk with facts