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How do reverse mortgages work?

Just how do reverse mortgages work? If you're like most about-to-retire homeowners, you've probably heard of these financial products. They're growing in popularity, but you may still have unanswered questions. Here are the basics.

How do reverse mortgages work for seniors?

Reverse mortgages are specifically designed with senior property owners in mind. Unlike conventional mortgages, these borrowing solutions let you use the equity, or cash value, that you've accumulated by paying off your mortgage. Home equity conversion mortgage (HECM) is a Federal Housing Administration (FHA) reverse mortgage program. Instead of having to sell your home for a one-time payout or have a traditional loan with monthly repayments, you get to retain ownership and enjoy improved liquidity during your retirement with a reverse mortgages.

How do reverse mortgages work from a financial standpoint?

Reverse mortgages differ from products like home equity loans. Even though both are linked to the cash value of your home, reverse mortgages don't force you to make monthly repayments.

In most cases, consumers also have a great deal of freedom to choose how they'll use their reverse mortgage proceeds. For instance, you might decide to add to your personal savings or simply use the money as supplemental retirement income. As well, the payments from your reverse mortgage aren't taxable.

Reverse mortgages also come with additional responsibilities and requirements. The loan is repaid after the borrower permanently moves out of the home, stops using the property as the principal residence, sells the home or the last surviving borrower dies. The loan also becomes due if you stop paying your property charges, such as taxes, homeowners’ insurance, or fail to maintain the property in good repair.

Is reverse mortgage a good option?

Each homeowner's circumstances are unique. Some retirees, for instance, may be concerned about the potential impacts that borrowing against their home's value might have on the amount of equity that remains for their heirs. Others may have medical circumstances that make it hard to fulfill the principal residence requirement that determines reverse mortgage eligibility.

While there are challenges to taking advantage of any financial product, the secret to making the best use of your options lies in getting educated. Your reverse mortgage lender must have the experience to help you navigate the lending process effectively.

Contact Quontic Bank to learn more how reverse mortgages work

Quontic Bank works hard to make homeowners aware of the most effective mortgage opportunities for their personal situations. Discover why so many retirees have come to rely on our reverse mortgage options. Get in touch with a Quontic Bank specialist online, or call 1-800-388-7689 for your complimentary quote.

Quontic Bank is a Member FDIC bank, regulated by the U.S. Office of the Comptroller of the Currency. We are authorized by the U.S. Department of Housing and Urban Development (HUD) to make Federal Housing Authority (FHA)-insured mortgage loans in all fifty states. We have an A+ rating from the Better Business Bureau and were named to the Top 200 Healthiest Banks In America in 2016, ranking No. 88 of the 6,199 federally insured banks in the U.S., according to We were also ranked the 12th largest reverse mortgage lender in the U.S. by "Reverse Mortgage Daily” in September 2017. Quontic Bank is a member of the National Reverse Mortgage Lenders Association (NRMLA) and holds NMLS ID 403503.

Disclosure: Content & information provided as a courtesy. In addition, such information should not be relied upon as the only source of information. Ask for additional details. Quontic Bank makes no representations or warranties as to accuracy or completeness of information & assumes no liability for use of this information. Terms, restrictions, conditions & fees for accounts, products, programs & services are subject to change without notice. Information is accurate & effective as of January 25, 2017. Additional lending terms, conditions, fees & exclusions may apply. Subject to eligibility & credit approval. Not all applicants will qualify. Not all products are available in all states or for all amounts. The information provided should not be construed as financial, legal or tax advice. Quontic Bank is a member of the National Reverse Mortgage Lenders Association (NRMLA) and holds NMLS ID 403503.

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