Reverse Mortgage Myths, Debunked

Reverse mortgages carry more myths than almost any product in finance, and those myths keep people from a tool that could improve their retirement. Let us clear the air, one by one.

Myth: “The bank takes my home.”

False. You keep the title and you own your home. The lender holds a lien, just as with any mortgage. You can sell whenever you like, and you decide what happens to the property.

Myth: “My children will be stuck with the debt.”

False. A HECM is non-recourse. Your heirs will never owe more than the home is worth. They inherit the home and choose to keep it — by repaying the balance — or to sell it and keep any remaining equity. They are never personally on the hook for a shortfall.

Myth: “I could be forced out of my home.”

False, as long as you meet the basic terms — pay your property taxes and insurance, maintain the home, and live there as your primary residence. Meet those and the home is yours to stay in.

Myth: “It is a last resort for desperate people.”

Increasingly false. Financial planners now use reverse lines of credit as a deliberate retirement strategy — a buffer to avoid selling investments in a down market, a bridge before claiming Social Security, or simply a standby reserve that grows over time.