Myth: Left with Large Debt at the End of Life

Reverse Mortgage Myth Buster #2

A second common misconception I hear a lot surrounding Reverse Mortgages is this: If a senior homeowner does a Reverse Mortgage then the family or that senior homeowner will be left with a large debt at the end of their life…this is NOT TRUE, and here’s why. The reason why is the HECM reverse mortgage (FHA insured) is a non-recourse loan. This means that the senior homeowner and their estate will never find themselves in a situation where they owe more than the value of their home. So, if the loan amount ever exceeds the value of your home at some point in the future, your Reverse Mortgage will continue, and you will never be held responsible for any mortgage balance that exceeds the equity in the home thanks to this federal insurance. So bottom-line the HECM Reverse Mortgage is a government insured loan that allows a qualifying senior homeowner to access a portion of the equity in their home without ever making a monthly mortgage payment and if you ever owe more than the home is worth, that balance is paid off by the FHA insurance. Neither you nor your estate will ever be held responsible for a deficiency.