The Mortgage Sensei

The Mortgage Sensei
Reverse mortgage

Reverse Mortgage (HECM)

A reverse mortgage lets homeowners 62 and older turn part of their equity into funds, with no required monthly mortgage payment. Get a rough range, then talk it through.

  • Age 62 and older
  • FHA-insured HECM
  • Counseling required

Rough estimate

Sample figures, edit freely
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The range uses an approximate principal limit table and the 2026 HECM limit of $1,249,125. HUD sets the real factors by age and expected rate, so treat this as a ballpark. Upfront mortgage insurance is estimated at 2% of the home value up to that limit.

Illustrative funds available

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    Rough illustration only, not a quote. Actual proceeds depend on the youngest borrower's age, the expected rate, the home appraisal and costs. Any existing mortgage is paid off first. Taxes, insurance and upkeep remain your responsibility.

    Reverse mortgage or HELOC

    Both use home equity. They work very differently.

    FeatureReverse mortgage (HECM)HELOC
    Who qualifiesAt least one borrower 62 or older, primary residenceAny age, with income and credit review
    Monthly paymentNo required mortgage payment. Taxes, insurance and upkeep still dueRequired payments, often interest only at first
    RepaymentWhen the last borrower leaves, sells or passes awayOver the loan term
    CounselingHUD-approved counseling requiredNot required
    Upfront costHigher, includes FHA mortgage insuranceOften lower
    RateFixed or adjustableUsually variable

    How a HECM works

    • Age and home. At least one borrower is 62 or older and the home is your primary residence.
    • No required mortgage payment. You still pay property taxes, insurance and upkeep. The loan balance grows over time.
    • Payout choices. Lump sum, a line of credit, monthly payments, or a mix.
    • Existing mortgage. Any mortgage on the home is paid off with the proceeds at closing.
    • Counseling. HUD-approved counseling is required before you move forward.
    • Repayment. The loan comes due when the last borrower moves out, sells or passes away. It is non-recourse.

    Costs and duties

    What comes with a reverse mortgage

    Costs are higher than many loans. Plan for the ongoing duties before you decide.

    • Upfront mortgage insurance, 2%
    • Annual mortgage insurance, 0.5%
    • Origination, title and servicing
    • Taxes and insurance stay yours
    • Upkeep stays yours

    Questions to settle first

    • How long will you stay? A reverse mortgage fits owners who plan to remain in the home. Moving out can make the loan due.
    • Who lives with you? Ask about protections for an eligible non-borrowing spouse and how heirs would handle the loan.
    • Which benefits do you receive? Proceeds can affect needs-based benefits such as Medicaid or SSI. Check with an advisor.
    • What else could work? Compare a HELOC, downsizing or a cash-out refinance so you choose with all the numbers.

    Reverse mortgage FAQ

    Can I lose my home?

    You keep title. The loan can become due if you stop paying taxes, insurance or upkeep, or no longer live there as your primary home.

    What do my heirs owe?

    They can repay the lesser of the balance or 95% of the appraised value and keep the home, sell it and keep any extra, or hand it over. The loan is non-recourse.

    Is the money taxable?

    Proceeds are loan funds, not income. They generally do not affect Social Security or Medicare, but can affect needs-based benefits. Check with an advisor.

    Can a spouse under 62 stay in the home?

    Eligible non-borrowing spouses can have protections, with conditions. Ask for specifics.

    Can I use it to buy a home?

    Yes. The HECM for Purchase program pairs a large down payment with the reverse mortgage.

    How accurate is the estimator?

    It is a ballpark only. HUD tables use the youngest borrower's age and the expected rate. Duane can run a proper quote.

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