About Reverse Mortgages

Reverse mortgages provide qualified homeowners access to home equity, while retaining ownership of their home. These loans are designed to provide increased liquidity, accessibility and flexibility for homeowners 62+ with additional jumbo loan options for those 55+ with homes in excess of $970,800.

The loan is called a “reverse mortgage” because instead of making monthly payments to a lender – as with traditional mortgages, the lender pays the borrower.

With a variety of payout options, reverse mortgages are among the most versatile type of loans available.

The amount that will be available for withdrawal varies by borrower and depends on the following:

Borrowers are not required to pay back the loan until the home is sold or the last remaining homeowner permanently vacates the home. They can, however, make payments for any amount at their discretion without penalty.

As with any mortgage loan, borrowers must meet loan obligations: paying property taxes and homeowner’s insurance and maintaining the home. They also must live in the home as their primary residence.

If there is more than one borrower and no eligible non-borrowing spouse, the age of the youngest borrower is used to determine the amount you can access.

*Borrower(s) responsible for property taxes, home owners insurance and home maintenance. Proprietary loan options available in select states only.

Additional Details

Borrowers must pass a financial assessment, which includes verification of income, assets, monthly living expenses and credit history. They must also demonstrate timely payment history with regards to real estate taxes and insurance.

Other fees may apply

*Not a commitment to lend. Other conditions or requirements may apply. All loans subject to underwriter approval. Proprietary loan options available in select states only.

Long-Term Care Facts

*According to the U.S. Department of Health & Human Services.  
 **According to Genworth, one of the nation’s leading providers of long–term care insurance.

Funding Long-Term Care

As one of the nation’s only reverse mortgage professionals to hold the Certified in Long-Term Care® designation, Steven is uniquely qualified to discuss the subject of longevity and the consequences of caregiving on families – emotionally, physically and financially – years down the road.

It’s important to point out that extended care is not a place or condition; rather, it is a life changing event. Failure to plan accordingly could have devastating effects on both the person in need and the ones they love most.

Without proper measures in place ahead of time, family and loved ones may be forced to step in, potentially jeopardizing their mental and physical well-being. Care options – especially for care at home – may be limited, and the quality of care can be compromised.

If you think that you or a loved one may live a long life and require care, accessing home equity with a reverse mortgage may help.

*Borrower(s) responsible for property taxes, home owners insurance and home maintenance. Proprietary loan options available in select states only.

Involve Family & Caregivers

Understanding extended care and what proactive decisions should be made allows us to better serve the needs of our clients. Ultimately, it can be in your best interest to pay for care or even fund long-term care insurance by converting a portion of home equity with a reverse mortgage.

Everyone’s situation is unique and it’s important to carefully explore all options before making any financial decision. Do your research with the help of your loved ones and future caregivers.

Reverse Mortgage Myths & Realities

Many people think they know all about reverse mortgages, but with so much misinformation out there, it can be hard to decipher the myths from the realities. Here are some of the most common misperceptions & the real truths.

Myth #1: You give up owning the home.

Contrary to popular belief, you and your estate continue to retain ownership of your home. The lender’s interest is limited to the outstanding loan balance as a lien on the property. Upon the last remaining borrower permanently leaving the home, the lender gets paid off a sum totaling the amount borrowed plus interest accrued over the life of the loan.

Myth #2: I will leave a debt to my heirs.

Reverse mortgages are non-recourse loans, so when the property is sold and if the sale of the home doesn’t cover the balance of the loan, the borrower or the heirs are not responsible for the difference of the loan. The FHA actually covers the difference.

How much home equity is left when you leave the home depends on how much you borrow, how much interest has accrued over the life of the loan and the value of the home at the time of sale. 

It’s important to remember that home equity is only one piece of the pie. While you may leave less home equity to your heirs, it doesn’t necessarily mean that you will leave less of an overall inheritance. Utilizing your home equity tax efficiently with a reverse mortgage, may allow you to better manage retirements risks such as:

How you navigate these risks will determine the success of your legacy. 

Myth #3: There are restrictions on how proceeds can be used.

Proceeds can be used however you see fit. There are no restrictions on what you can do with your money. We recommend careful consideration of all options.

Consult with a tax specialist or financial adviser before making any investments.

What is a Reverse Mortgage in Learning Center

Myth #4: The home must be owned free and clear.

Many borrowers actually use the reverse mortgage loan to pay off an existing mortgage and eliminate monthly mortgage payments. Paying off the existing mortgage and any other liens is required as part of the loan.

*It is the borrower’s responsibility to continue to pay for property taxes, homeowner’s insurance and home maintenance.

Myth #5: Reverse mortgages should only be used as a last resort.

The perception that reverse mortgage loans are only for ‘financially strapped’ borrowers is changing. Affluent borrowers with multi-million-dollar homes and healthy retirement assets are using reverse mortgage loans as part of their financial and estate planning, and are working closely with their financial advisers and estate attorneys to secure a better retirement.

Myth #6: Reverse mortgage interest rates are exorbitant.

In fact, reverse mortgage rates are on par with traditional mortgage rates. Interest only accrues on the actual amount borrowed, NOT on the unused portion of funds available.

Borrowers may choose from fixed or variable rate options.

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Myth #7: The fees are really expensive.

Closing costs, which include title, recordation, loan origination and state or county fees, are the same as with traditional mortgages. Reverse mortgages are more expensive than traditional loans because they also include reverse mortgage insurance, which provides important protections for borrowers.

There is an up-front mortgage insurance premium (MIP) required on all HECM reverse mortgages. This “MIP” is a flat 2 percent premium based on the maximum lending amount of $970,800 or your home’s appraised value, whichever is less. Ongoing MIP rates are currently 0.5 percent of the outstanding loan balance, accrued annually and paid when the loan is due.

Myth #8: I won't qualify for a reverse mortgage due to my limited income.

While a traditional mortgage requires monthly payments, a reverse mortgage pays you.

Reverse mortgages are based on residual income, which is calculated by adding monthly income and deducting debt payments, utilities and maintenance costs estimated by the home’s geographic region and square footage. Qualified borrowers, especially those on a fixed or limited income, will have a far easier time qualifying for reverse mortgages than traditional mortgage loans.

Myth #9: “I don’t need it now.
I can just wait and get a reverse mortgage when I really need it.”

It’s tougher now to get a reverse mortgage than in years past due to FHA’s tightening of qualifying standards. Even if you meet today’s qualifications, you might not qualify at a later date.

Other factors to consider are as follows:

Myth #10: I’ll lose my government benefits.

Reality: Reverse mortgage payouts generally do not affect regular Social Security or Medicare benefits. However, needs-based benefits, such as Supplemental Security Income or Medicaid, may be affected. Consult with a financial professional about your individual situation.

Reverse Mortgage Glossary

Most homeowners are quite familiar with traditional mortgages, but know very little about reverse mortgages. With this in mind, we’ve created the glossary below to help you better understand key reverse mortgage terms from A to Z.


A report that states an opinion on the value of a property based on its characteristics and the selling prices of similar properties in the area. 


A service provided by an independent third-party, typically approved by the U.S. Department of Housing and Urban Development, to make sure the borrower fully understands the reverse mortgage and reviews alternative options, prior to application.

Mandatory for the HECM program and in certain states for all types of reverse mortgages. ​

Fixed Rate

An interest rate that remains constant over the life of the loan. 


Home Equity Conversion Mortgage. This is the industry term for Reverse Mortgage.  

Initial Principal Limit

Amount of funds you are eligible to receive from a reverse mortgage before closing costs are deducted. 

Interest Rate

Expected Interest Rate: The interest rate used to calculate the principal limit. It equals either the 10-year CMT or the 10-year LIBOR rate plus a margin. 

Actual Interest Rate

The interest rate first charged on the loan beginning at closing; it equals one of the HUD-approved interest rate indices (1-month CMT, 1-year CMT, or 1-month LIBOR) plus a margin. Also called Initial Interest Rate.


Reverse mortgage interest rates are tied to one of two indexes, the Constant Maturity Treasury rate (CMT) or the London Interbank Offered Rate (LIBOR).

Senior in library reading

Lifetime Expectancy Set-Aside (LESA)

The LESA life expectancy set aside, helps reverse mortgage borrowers with credit challenges or limited income to stay current with payments for property taxes and insurance. 

Setting up a LESA involves carving out a portion of the principal limit (the total pool of funds available) into a set aside account that is preserved solely for the payment of property charges.

The exact amount of the carve out varies widely from borrower to borrower because it is based on age and how much property taxes and insurance cost.

Line of Credit Growth Feature

In some cases, the available line of credit increases over time according to
the terms of the loan agreement.

Loan Closing Date

Date on which your reverse mortgage is scheduled to close. 


An amount added to the Index (CMT or LIBOR) to determine both the Expected and Actual interest rates.

The margin is determined by the loan investor.

Maximum Claim Amount

The lesser of a home’s appraised value or the maximum loan limit that can be insured by FHA.
Used in determining the principal limit. 

MIP (Mortgage Insurance Premium)

Under the HECM program, a fee charged to borrowers that is equal to a small percentage of the maximum claim amount, plus an annual premium thereafter on the loan balance. The MIP guarantees that if the lender goes out of business, FHA will step in and ensure the borrower has continued access to his or her loan funds. The MIP further guarantees that when the property is sold to pay back the reverse mortgage, the borrower will never owe more than the value of the home. 

Net Principal Limit

Amount of funds you are eligible to receive at closing after loan costs have been deducted. 

Non-Recourse Loan

A feature that limits the amount owed by the borrower, heirs or estate when the loan becomes due and payable to the appraised home value.

For the HECM program, non-recourse only applies when the home is sold. 

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Open End Line of Credit

A line of credit that allows the borrower to withdrawal funds, make payments back to the lender, and then have the ability to make subsequent withdrawals. 

Origination Fee

A fee charged by the lender to cover its expenses for originating the loan. A lender can charge the greater of $2,500 or 2 percent of the first $200,000 of your home’s value plus 1% of the amount over $200,000. HECM origination fees are capped at $6,000. Some lenders waive or reduce the origination fees on certain products. 

Prepayment Penalty

Paying off a reverse mortgage early (that is, before the borrower permanently vacates the property). Under the HECM program, there is no penalty for paying all, or a portion, of the loan prematurely.

Principal Limit

The total loan proceeds available at closing. 

​Title Insurance

A type of insurance policy that protects a homeowner or lender against financial loss from defects in title to real property and from the invalidity or unenforceability of mortgage liens. The cost for the policy is typically paid at closing by the borrower. ​

Variable Rate

An interest rate that adjusts monthly or annually.

Get Your Reverse Mortgage Quote Now!

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According to the U.S. Department of Health & Human Services, 10,000 people per day are turning 65 and that will continue until the year 2030. 

Seven out of 10 of these people will require some level of long-term or extended care in their lifetime. 

This care will consist of help with the activities of daily living such as: bathing, dressing, eating, transferring and toileting.

The need for care may also extend to usage of the telephone, meal preparation, housekeeping, managing personal finances or transporting to and from doctors’ appointments.

Without proper measures in place ahead of time, paying for care could wipe out your savings and wreak financial havoc on your caregivers.

As one of the nation’s only reverse mortgage professionals Certified in Long-Term Care, I’m uniquely qualified to discuss with you the subject of longevity and its acute consequences on families – financially, physically and emotionally – years down the road.

Here are five ways leveraging housing wealth by way of a reverse mortgage can help qualified homeowners cover the costs of long-term care.

  1. Pay Off an Existing Mortgage Loan
    Increase cash flow that can be used to pay for long-term care by converting a traditional mortgage to a reverse mortgage, eliminating the mandatory mortgage payment.
  2. Establish a Reverse Mortgage Line of Credit
    Establish a bucket of money outside of your portfolio for future care. This line of credit comes with a guaranteed cost of living increase each year, meaning the unused portion will grow over time.      
  3. Select a Tenure Payout Option
    Instead of making monthly payments to the lender, the lender would send YOU a check each month, helping you to budget for care.
  4. Take a Lump Sum Payout
    A lump sum payout will give you the funds you need for care now.
  5. Structure a Multi-Layered Reverse Mortgage
    You can combine payout options to create short- and long-term benefits.

In short, there are many factors to consider when it comes to funding long-term care.

If you’re ready to learn more, click below to get started. As always, Expect More with Sless!