Who Really Owns the House with a Reverse Mortgage?

Portrait of happy senior couple cuddling with dog sitting on couch enjoying family weekend at home in retirement

Who Really Owns the House with a Reverse Mortgage?

There can be a lot of confusion surrounding reverse mortgages, and a common question is: Does taking out a reverse mortgage mean the bank now owns your house? The answer is a resounding no. Here's why:

  • Reverse Mortgages vs. Traditional Mortgages: Unlike a traditional mortgage where you make monthly payments to gradually own your home, a reverse mortgage allows seniors 62 and older to access the equity they've built up in their homes. You receive the money as a line of credit, fixed monthly payments, or a lump sum.
  • Borrowing, Not Selling: The key thing to remember is you're borrowing against your home's value, not selling it. The title to the house remains in your name. Think of it like a loan secured by your car – you can still drive it even though the lender has a stake in it.
  • Ownership Responsibilities Remain: While you retain ownership, there are still responsibilities. You'll need to keep paying property taxes, homeowner's insurance, and maintain the home in good condition. Failure to do so could put the house at risk of foreclosure, at which point the lender would recoup their money by selling the property.
  • Planning for Heirs: It may be important to consider how a reverse mortgage will impact your heirs. The loan becomes due when you move out permanently, sell the house, or pass away. If the loan balance is greater than the home's value, your heirs are not obligated to cover the difference. In most cases there’s plenty of equity available and that would go to your estate after the loan is paid off, just like a normal mortgage.

Reverse mortgages can be a valuable tool for seniors, but it's crucial to understand the implications before taking one out.

To learn more about reverse mortgages and to find out if one is right for you visit https://reganteam.com/reverse-mortgage/ or call 707-508-8473