Reverse Mortgages

How Does a Reverse Mortgage Work?

Unlike a traditional mortgage where you make monthly payments to a lender, a reverse mortgage pays you. The loan balance grows over time as interest accrues, and repayment is typically deferred until the borrower sells the home, moves out, or passes away.

The most common type is the Home Equity Conversion Mortgage (HECM), which is insured by the Federal Housing Administration (FHA). HECMs have specific requirements including mandatory counseling from a HUD-approved agency before closing.

Eligibility Requirements

• • Must be 62 years of age or older
• • Home must be your primary residence
• • Must have significant equity in the home (typically 50%+)
• • Must maintain property taxes, insurance, and upkeep
• • Must complete HUD-approved reverse mortgage counseling

Payment Options

Reverse mortgage borrowers can typically choose from several disbursement options:

• • Lump sum — one-time payment at closing
• • Monthly payments — steady income stream (tenure or term)
• • Line of credit — draw funds as needed (grows over time)
• • Combination — mix of the above options

Important Considerations

Reverse mortgages are not right for everyone. The loan balance increases over time, reducing the equity available to heirs. Fees and closing costs are typically higher than traditional mortgages. And if you fail to maintain the property, pay property taxes, or keep homeowners insurance current, the loan can become due.

That said, for many Central Florida retirees, a reverse mortgage provides financial flexibility that allows them to age in place comfortably. Our team can walk you through the numbers and help you determine if this option makes sense for your situation.