Does the Bank Own My Home with a Reverse Mortgage?

The short answer: no

This is the most common question Kenny hears about reverse mortgages. With a reverse mortgage you keep the title to your home, just like with a traditional mortgage. The lender places a lien on the property for the loan balance — it does not take ownership.

What is a reverse mortgage?

A reverse mortgage lets homeowners 62 and older convert part of their home equity into cash without selling the home and without a required monthly mortgage payment. Most are FHA-insured Home Equity Conversion Mortgages (HECMs). Instead of you paying the lender each month, the loan balance grows over time as you receive funds and interest accrues.

What you're still responsible for

Because you still own the home, you keep the responsibilities of ownership. To keep the loan in good standing you must:

• Live in the home as your primary residence
• Pay property taxes and homeowners insurance (and flood insurance if required)
• Pay any HOA dues
• Keep the home in good repair

When does a reverse mortgage have to be repaid?

The loan becomes due when one of these happens:

• The last borrower sells the home or transfers the title
• The last borrower moves out permanently, including living elsewhere for more than 12 consecutive months for health reasons
• The last borrower passes away (an eligible non-borrowing spouse may be able to remain in the home)
• The loan terms aren't met — for example, property taxes or insurance aren't paid

What happens for my heirs?

Your heirs inherit the home and decide what to do with it. They can sell it, repay the loan and keep any remaining equity; keep the home by paying off or refinancing the loan; or, with an FHA-insured HECM, keep it by paying the lesser of the loan balance or 95% of the home's appraised value. If the home sells for less than the loan balance, FHA insurance covers the difference — heirs don't owe more than the home is worth.

The bottom line

A reverse mortgage is a loan, not a sale. You stay the owner, you stay in your home and you keep its responsibilities. Kenny encourages families to have these conversations together — adult children and financial advisors are always welcome at the table.

Reverse mortgage borrowers must live in the home as their primary residence, continue to pay property taxes, homeowners insurance and HOA dues, and maintain the home. The loan becomes due when the last borrower no longer lives in the home. These materials are not from, nor approved by, HUD, FHA or any government agency. This article is general information, not financial, tax or legal advice.