Reverse Mortgage Questions, Answered Honestly.

A lump sum at closing, fixed monthly advances for a set term or for as long as you live in the home, a line of credit you draw as needed, or a combination. Many borrowers first use proceeds to pay off an existing mortgage, which is how the required monthly payment disappears.

Loan proceeds are generally not taxable income because they are borrowed money, not earnings. Ken is not a tax adviser, and how proceeds interact with your overall situation belongs in a conversation with your tax professional, which Ken is glad to join.

Social Security and Medicare are generally not affected. Need-based programs such as Medicaid and SSI can be affected by how proceeds are held, which is a planning detail worth reviewing with an elder law attorney before drawing funds.

Costs include FHA mortgage insurance, origination and closing costs, and ongoing interest that accrues on the balance. Most costs can be financed into the loan rather than paid out of pocket. Because figures change with rates and program updates, Ken quotes them for your actual scenario rather than publishing numbers that go stale.

Yes to both. You can sell whenever you choose and keep any equity above the payoff, and you can make payments of any size at any time, including full payoff, without penalty.

The balance grows over time as interest accrues, which means less equity later for you or your heirs. Upfront costs are higher than a typical home equity loan. Property charges remain your responsibility, and falling behind on them has serious consequences. And if you plan to move within a few years, the costs rarely justify the loan. Ken will tell you when a HELOC, downsizing, or doing nothing beats a HECM, because sometimes it does.

Federal rules require every HECM borrower to complete a session with an independent HUD-approved counselor before applying. It exists to protect you, and Ken considers it a feature. An informed borrower with an informed family is exactly the client he wants.