Reverse mortgage basics
Benefits of reverse mortgages
The core benefit is cash flow without a monthly mortgage payment — and the freedom to take the money as a lump sum, monthly income, a credit line, or a mix.
- You stay in your home. That is usually the whole point.
- It can pay off your existing mortgage, which removes a monthly payment from your budget.
- It is simple to qualify for. There is no minimum credit score and generally no income requirement.
- No monthly mortgage payment is required. You must still live in the home as your primary residence, pay property taxes and homeowners insurance, and maintain the home to FHA standards.
- Loan proceeds are not taxable.
- It cannot go upside down. Your heirs will never be personally liable for more than the home sells for.
- Your heirs keep the remaining equity after the loan balance is paid off.
- The interest rate may be lower than traditional mortgages and home equity loans.
You choose how the money reaches you
This flexibility is one of the most underrated features of the loan:
- A line of credit held in reserve for emergencies
- Monthly payments
- A lump sum distribution
- Any combination of the above
On a HECM line of credit, the unused portion grows over time regardless of what happens to your home’s value. That is a meaningful planning tool, and it is the reason some financially comfortable homeowners set one up years before they expect to need it.
How it compares
| Feature | HECM | HomeSafe | HELOC | 15/30-yr fixed |
|---|---|---|---|---|
| Monthly mortgage payments | Optional | Optional | Required | Required |
| You still own your home | Yes | Yes | Yes | Yes |
| Unused credit line grows regardless of equity | Yes | Yes | No | N/A |
| Non-recourse loan | Yes | Yes | No* | No* |
* Except where prohibited by state law.
The trade-offs are real too, and we would rather you read them than skip them: see the pros and cons side by side.