Hey, Tom, What Else Should I Know?

No payments are due on a reverse mortgage while it is outstanding. The loan becomes due and payable when the borrower ceases to occupy their home as their principal residence.  This can occur if the senior, the last remaining spouse in cases of couples, passes away, sells the home, or permanently moves out of the home.  The home does not have to be sold to pay off the loan.  The borrower, or their heirs, can instead pay off the reverse mortgage and keep the home.  In any event the amount owed on the reverse mortgage cannot exceed the value of the home at the time that the loan must be repaid. Moreover, if the home is sold and the sale proceeds exceed the amount owed on the reverse mortgage, the excess proceeds go to the borrower or the borrower's estate.

As with any other mortgage, you hold the title and the bank holds a lien against the property.  There are no income or credit requirements for reverse mortgages.  Virtually anyone over age 62, with a home that qualifies can get the loan.  And there are no risks with the popular HECM loan.  It's fully insured by FHA.  The bank can't demand any more money from you or your family if it turns out there isn't enough equity to repay the loan.

Reverse mortgages generally don't produce enough money to pay for extended long term care.  A small loan, however, can produce enough in premium payments to leverage a large long term care insurance benefit.