Reverse Education Center

Life of a Reverse Mortgage

Walk through the life of a reverse mortgage loan and what borrowers can expect from the application process through the end of the loan.

Education Center Topics
The reverse mortgage process begins with the homeowner submitting an application to a lender, which includes a lender conducted financial assessment, property appraisal, and document preparation. Meanwhile, the homeowner consults with a HUD-approved counselor to understand the implications and responsibilities of the loan.   Once approved, the homeowner attends a closing meeting to finalize the terms and sign the loan documents. The loan becomes active, and any existing mortgage balance is paid off with the proceeds.
Reverse mortgage borrowers are required to keep current with property taxes, homeowner's insurance, and homeowner's association fees if applicable. They must also maintain the home in good condition to meet federal housing standards.   Failure to meet these obligations can lead to foreclosure of the reverse mortgage.
Typically, borrowers can choose to receive reverse mortgage funds as a lump sum, monthly payments, a line of credit, or a combination of these options.
A reverse mortgage does not affect the borrower's ability to leave the home to their heirs, but the loan must be repaid when the borrower passes away. This can mean selling the home to pay off the loan or using other assets to settle the balance if the heirs wish to keep the home.   It's essential for borrowers to discuss these details with their heirs as part of estate planning. Learn More
Renting out part or all of your home is typically allowed with a reverse mortgage as long as the property remains your primary residence.   However, you should review the specific terms of your loan agreement and consult with your lender, as requirements can vary depending on the type of reverse mortgage and the lender’s policies.

Applying

A woman discussing reverse mortgage equity requirements
Reverse mortgage equity requirements

To be eligible for a reverse mortgage, borrowers need to own their homes outright or have substantial equity.

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A couple discusses the seven steps to getting a reverse mortgage with a financial counselor
Applying for a reverse mortgage in 7 steps

The process for getting any mortgage can be confusing. We break down getting a reverse mortgage into seven simple steps, starting with research.

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A woman and her grandchild playing blocks
What if you don’t have enough equity for a reverse mortgage?

A reverse mortgage requires that borrowers have substantial equity in their homes. Here are some options if you don't have enough equity to qualify.

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End of the Loan

Heirs and reverse mortgage debt.
Are heirs responsible for reverse mortgage debt?

When a reverse mortgage borrower passes away, their estate must resolve the debt. While heirs may need to decide how that happens, they are not personally responsible for the debt.

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What happens when a reverse mortgage borrower dies?
What happens when reverse mortgage borrower dies?

What heirs need to know about the end of a reverse mortgage when the last borrower passes away.

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A couple considering paying off their reverse mortgage
Can you walk away from a reverse mortgage?

There are several ways to exit or walk away from a reverse mortgage before it comes to term. Contrary to a popular myth, none of them require that you pay a penalty.

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