Reverse Mortgages: What Every Homeowner 62+ Should Know
September 1, 2026
A lot of retirees sit on a pile of home equity and wonder how to put it to work without giving up the house they've lived in for decades. A reverse mortgage can do exactly that, but the details matter more than most people realize. Before assuming it's the right move (or dismissing it entirely), it's worth understanding how the product actually works and where it tends to help (and where it doesn't).
A reverse mortgage is a loan taken out against the equity in a home owned by someone 62 or older. Unlike a traditional mortgage, the borrower doesn't make monthly payments to the lender. Instead, the loan balance grows over time and is repaid when the homeowner sells, moves out permanently, or passes away. The homeowner retains title to the property and continues to live in it as long as property taxes, homeowners insurance, and basic upkeep are handled. Funds can be received as a lump sum, a line of credit, monthly payments, or some combination of those options.
One of the biggest misconceptions is that the bank owns the home once a reverse mortgage is in place. That's not how it works. The homeowner (or their heirs) remain on title, and the lender's interest is secured by a lien on the property, similar to any other mortgage. Another common concern is that heirs will be stuck with a huge debt they can't pay off. In reality, heirs can sell the home and keep any equity above the loan balance, or they can refinance the loan into a traditional mortgage if they want to keep the property. The loan is also non-recourse, meaning the lender can never pursue the borrower or heirs for more than the home's value.
A reverse mortgage tends to make the most sense for homeowners who plan to stay put long-term and have a clear use for the funds, whether that's covering living expenses, handling medical costs, or simply creating a financial cushion. It tends to make less sense for someone planning to move in the next few years, since closing costs and interest can eat into equity quickly. Counseling through a HUD-approved agency is required before closing, and that session often surfaces considerations a borrower hadn't thought through. As with any major financial decision, the right answer depends on the full picture: income, other assets, heirs' plans, and how long the homeowner expects to remain in the home.
Reverse mortgages aren't a one-size-fits-all solution, but for the right homeowner they can unlock real flexibility in retirement. The key is going in with clear eyes about how the loan grows, what obligations remain, and what happens to the home down the road.