There are many misconceptions about reverse mortgages. Below, we break down the most common myths and provide the facts to help you make a well-informed decision.

Myth: You lose ownership of your home when you take out a reverse mortgage.

Fact: You remain the owner of your home as long as you meet the loan requirements, including maintaining the property, paying property taxes, homeowners insurance, flood insurance (if required), and any homeowners association dues.¹ Like any mortgage, a lien is placed on the property to secure repayment, but you continue to hold the title.

Myth: A reverse mortgage will leave your children with nothing.

Fact: While a reverse mortgage does reduce home equity over time, it doesn’t necessarily mean there will be nothing left for your heirs. Factors such as home appreciation, the length of the loan, and optional payments can all impact how much equity remains. In many cases, there is still equity left for your children.

Myth: Your children will be responsible for repaying the loan.

Fact: A reverse mortgage is a non-recourse loan, meaning the lender can only be repaid from the sale of the home—never from your heirs’ personal assets. Even if the home’s value decreases, repayment is limited to the home’s worth. Your heirs also have the option to refinance the loan if they wish to keep the property.

Myth: You must make monthly mortgage payments with a reverse mortgage.

Fact: Unlike a traditional mortgage, there are no required monthly payments with a reverse mortgage. However, you are responsible for maintaining the home, paying property taxes, homeowners insurance, and any applicable fees.¹

Myth: You must own your home outright to qualify.

Fact: While any existing mortgage must be paid off at closing, you do not have to own your home free and clear to be eligible. Many homeowners use a reverse mortgage to eliminate their current mortgage payments and free up cash flow.

Myth: If you get a reverse mortgage, you can’t sell your home.

Fact: You can sell your home at any time. Just like with a traditional mortgage, the reverse mortgage loan must be repaid at closing. There are no prepayment penalties if you choose to pay off your loan early.

Additional Facts About Reverse Mortgages

✔ Many retirees use reverse mortgages as a financial tool to enhance their retirement.
✔ A reverse mortgage allows homeowners 62 and older to access a portion of their home equity.
✔ The home must be your primary residence to qualify.
✔ FHA-insured reverse mortgages (Home Equity Conversion Mortgages or HECMs) are backed by the Federal Housing Administration, offering protections for borrowers and their families.
✔ HUD requires counseling from an independent, HUD-approved counselor before any costs are incurred.
✔ The funds you receive are typically not considered taxable income, but consulting a tax professional is recommended.²
✔ A reverse mortgage is not a government grant—it’s a loan that must be repaid when the home is sold, the borrower moves out permanently, or the loan terms are not met.²
✔ Reverse mortgage proceeds may impact needs-based programs such as Medicaid or Medi-Cal. If you receive such benefits, consult a professional before applying.
✔ Since a reverse mortgage is secured by your home, failure to meet loan terms (such as keeping up with taxes and insurance) could result in foreclosure.
✔ Rates, fees, and terms vary by state and may change over time.

A reverse mortgage can be a valuable financial tool when used correctly. If you have questions, reach out for a personalized consultation..