It’s just a mortgage. The fact that FHA insures them should tell you that the Federal Government sees this is an important tool to keep available for senior American homeowners. It is something both parties agree on.

The most important thing to remember about Reverse Mortgage is the word Mortgage. It is a mortgage, in many ways like any other mortgage. Each month interest accrues on the open balance. With typical, forward mortgages, you would send a monthly payment that would pay that month’s interest accrual and something towards the principal. With a Reverse Mortgage you are not required to make monthly payments for principal and interest, (but you could if you wanted to), for as long as you live in your home. The interest each month is added to the loan balance and that balance grows instead of reducing. That’s the “Reverse” part.

With a Reverse Mortgage, you are required to pay your property taxes, just like if you have no mortgage. So, that part is the same.

With a Reverse Mortgage, you ARE required to keep your home insured. If you have no mortgage you are NOT required to carry insurance but you’re at great risk if you don’t. That is a difference but I’m sure you’ll agree that homeowners insurance is an absolute necessity.

There is even a program within the reverse mortgage that allows you to have the bank pay your tax and insurance if you choose to.

The only other requirements are that you live there, the home with the reverse mortgage must be your primary residence, and you must maintain the property. If the roof is leaking you need to fix it. If you get termites you need to treat for them. All things you would do anyway, right?

A Deeper Dive