Reverse mortgages: Misunderstood, but a lifeline for aging in place
When most people hear the term reverse mortgage, they cringe. Stories of predatory lending practices, high fees, or children losing their inheritance have clouded the public’s perception. But the reality is more nuanced—and far more positive—than many realize. For older homeowners, especially those facing rising healthcare costs and wanting to stay in their homes, a Home Equity Conversion Mortgage (HECM) can be a smart, strategic financial lifeline. What Is a HECM? A Home Equity Conversion Mortgage is the most common type of reverse mortgage and is federally insured by the FHA. It’s available to homeowners aged 62 or older and allows them to convert a portion of their home equity into cash—without having to sell or move. Unlike a traditional mortgage, a HECM pays the homeowner. You can receive the funds as a lump sum, a line of credit, or monthly payments, and you don’t need to repay the loan as long as you live in the home and keep up with property taxes, insurance, and maintenance. Why the Bad Reputation? The stigma surrounding reverse mortgages often stems from: When a Reverse Mortgage Makes Sense HECMs aren’t for everyone—but they can be incredibly useful in the right situation. One of the most overlooked benefits? Funding in-home care. As people live longer, the cost of aging—especially in-home caregivers, medical equipment, or home modifications—continues to rise. For seniors who are “house-rich but cash-poor,” tapping into their home equity can provide much-needed funds to: These choices can dramatically improve both quality of life and peace of mind. Protecting the Borrower and Their HeirsModern HECMs have added safeguards. For example: A Tool—Not a Trap A reverse mortgage shouldn’t be rushed into. It’s a long-term financial decision best made with input from family, a trusted financial advisor, and a HUD-approved reverse mortgage counselor (which is now required). But dismissing the idea entirely can leave money on the table—money that could make aging in place safer, more comfortable, and more independent. By Anna Kussmaul