Myth or Fact – Is a Reverse Mortgage a Last Resort Only Option?

Reverse Mortgage Fact: Reverse Mortgage is a flexible option if you need to preserve savings, but have a lot of equity in your home.

A reverse mortgage isn’t necessarily just a “last resort”, but it’s often pitched that way because it’s a big financial decision with some serious trade-offs. It lets homeowners, typically 62 or older, tap into their home equity without selling the house—basically, the bank pays you instead of you paying a mortgage. The loan only gets repaid when you move out, sell, or pass away.

Sounds handy, right? But it’s not for everyone.

It’s not a last resort if you’re cash-strapped but equity-rich, want to stay in your home, and don’t have concerns of how much home equity is left to heirs.

• • You get flexibility:
    • Use the money for bills, medical costs, or whatever—without monthly payments eating your income.
    • On the flip side, flexibility does come with an expense: upfront costs (like origination fees and insurance), and interest grows up over time, reducing your equity.

Data-wise, about 50,000 reverse mortgages were issued in the U.S. in 2023, per the FHA—small potatoes compared to traditional mortgages. Most homeowners use them to supplement retirement, not as a desperation move. But the advertisements? They lean hard into the “last resort” vibe.

So, no, it’s not only for dire straits, but it’s not a casual choice either. It depends on your goals, health, and your plan for your estate and what you would like left to heirs.

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