Ask Terry Questions Reverse Mortgages

Reverse Mortgages

By Terry Savage on December 05, 2014 | Housing / Real Estate

Hi Terry,

My spouse is retired. My spouse is always jotting down contact info for reverse mortgages. What are reverse mortgages? Are they safe for retirees needing income?

Terry Says:  I have written many times about reverse mortgages.  Used correctly, they can provide a lifetime of tax-free income that you can never outlive — as long as you stay in your home.  I did one for my dad many years ago, and now he is 93 and has lived in his home and withdrawn far more money than it is currently worth!  (I tell him to keep going strong, because he is a real winner on this deal!)

The amount you can withdraw monthly, or in a lump sum, depends on your age, the value of your home, and the current level of interest rates.  If you choose a monthly check, you can never owe more than the house is worth.  When you die, or move out, your heirs can either pay off the balance of what has been withdrawn — or the house will be sold.  If the house if sold for less than has been withdrawn (your RM balance) they can never ask you for more money!   And no matter how much you’re drawing out, they can never force you out of your home!

But there are fees and interest rates associated with this withdrawal of tax-free money.  So it doesn’t make sense to do a RM unless you’re planning to stay in your home for at least 5 years.   Everyone who takes out a RM is required to go through independent counseling.  To learn more go to



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