A reverse mortgage, also known as home equity conversion mortgage (HECM), is a very different loan product than a traditional mortgage that is used to purchase a home. In fact, reverse mortgages are for homeowners – not those just looking to purchase a home.


Reverse mortgages function differently than what you commonly think of when you think “mortgage”, and they have different qualifying requirements. If you or someone you know is interested in a reverse mortgage, read ahead to learn more about this unique financing option.


Age restrictions and requirements:

Unlike traditional mortgages, which are available to legal adults of any age, only homeowners who are at least 62 or older can qualify for a reverse mortgage.


Additional qualifying requirements:

In order to qualify for a reverse mortgage, you must be a homeowner and the home you’re looking to take out a reverse mortgage on must be your primary residence. Additionally, you must have a fully paid off (or nearly fully paid off) mortgage on your home.


All reverse mortgage borrowers must complete a counseling session with a loan counselor who specializes in reverse mortgages before a loan will be approved – which isn’t so different from some traditional mortgage programs which require home buyer education; but it is a time commitment that should be taken into consideration if you are considering a reverse mortgage. Additionally, reverse mortgage borrowers are often required to complete financial assessments in order to ensure that the borrower has the assets on hand to buy property taxes, insurance and other financial requirements of home ownership.


What are the benefits of a reverse mortgage?


Reverse mortgages make the most sense for homeowners who can afford the costs of maintaining their property taxes, homeowners insurance and the upkeep on their home, who don’t plan to sell or move from their home in the foreseeable future and who want to access the equity that they have in their homes today in order to supplement any retirement income they may have, or for other purposes.


Reverse mortgages do not come with a monthly repayment obligation like a traditional mortgage. Instead, a reverse mortgage will be paid off when the homeowner passes away, sells their home or permanently moves out of their home.  Borrowers of a reverse mortgage may use the proceeds from their reverse mortgage as they see fit: there are little to no restrictions on how they money may be used, and a reverse mortgage may be paid out to a homeowner in either monthly installments or in one lump sum.


When you or your loved one is considering a reverse mortgage, make sure that you are comparing offers from lenders. Don’t compare the terms of a monthly payment plan to one that offers your payment in one lump sum. Make sure that you fully understand the repayment obligations.

**This material is not from HUD or FHA and has not been approved by HUD or a government agency. 

1804 W Union Ave Suite 202,

Tacoma, WA 98405

All Rights Reserved © 2017 Penny Lane Financial LLC .

Penny Lane Financial NMLS #1905686

Licensed in Washington,

NMLS Consumer Access - click here



All written content on this site is for information purposes only. Opinions expressed herein are solely those of Penny Lane Financial and our editorial staff. Material presented is believed to be from reliable sources; however, we make no representations as to its accuracy or completeness. All information and ideas should be discussed in detail with your individual financial professional prior to implementation. Insurance products and services are offered through Penny Lane Financial LLC.