Frequently Asked Questions (FAQs) About Reverse Mortgages
Your questions are welcome — and Wendy is here to help with clarity and aloha.
When you’re first learning about reverse mortgages, it’s completely natural to have questions. This is a big decision, and understanding the facts is the best way to feel confident. Below are the most common questions we hear from clients and families across Hawai‘i — along with clear, simple answers.
And remember: Wendy is always just a phone call away if you'd like help understanding how these options apply to your situation.
Q: Will I still own my home with a reverse mortgage?
A: Yes. You remain the legal owner of the home, just like with any traditional mortgage. As long as you live in the home as your primary residence, pay property taxes, maintain homeowner’s insurance, and take care of the property, you can stay in your home for as long as it remains your primary residence.
Q: How do I receive the money?
You can choose the option that best fits your lifestyle:
- Lump sum for large expenses
- Monthly payments to supplement income
- A line of credit that grows over time
- A combination of any of the above
Q: What happens if I move, sell my home, or pass away?
When you permanently move out, sell the home, or pass away, the loan becomes due.
Your heirs can:
- Sell the home to repay the reverse mortgage and keep any remaining equity
- Refinance the loan to keep the property
- Walk away if the home value is less than the loan balance (no penalty)
Q: Will my children or heirs be responsible for the loan?
No. Reverse mortgages are non-recourse loans. You or your heirs will never owe more than the home is worth.
Q: Can I get a reverse mortgage if I have a regular mortgage?
Yes. Many homeowners use a reverse mortgage to:
- Pay off their existing mortgage
- Eliminate monthly mortgage payments
- Free up additional cash flow for retirement
Q: What if my home value drops in the future?
You’re protected. If the home sells for less than the loan balance, FHA insurance covers the difference — not you or your family.
Q: Can I use the money for anything I want?
Yes! Funds are flexible and can be used for:
- Everyday expenses
- Medical care or in-home support
- Home improvements
- Travel or hobbies
- Helping family
- Emergency needs
It’s your equity — you choose how to use it.
Q: What if my spouse isn’t on the loan?
Eligible non-borrowing spouses may continue living in the home after the borrower passes away, as long as they meet ongoing loan requirements.
Q: Do I need perfect credit or high income to qualify?
No. Qualification is different from a traditional mortgage. The lender mainly checks that you can keep up with taxes, insurance, and maintenance — not your credit score or income level.
Q: Will I lose my Social Security or Medicare benefits?
No. Reverse mortgage proceeds do not affect Social Security or Medicare. (They may affect needs-based programs like Medicaid, so we can help you plan carefully if that applies.)
Q: Will I have to pay taxes on the money I receive?
Reverse mortgage proceeds are generally
not taxable because they are loan advances, not income.*
(*Always consult with a tax professional.)
Q: Can I get a reverse mortgage on a condo?
Yes, as long as the condo is FHA-approved (for HECM) or meets the guidelines of the private lender (for Jumbo products). We can help you determine eligibility.
Common Reverse Mortgage
Myths
Myth: “The bank will take my home.”
Truth: You retain full ownership. A reverse mortgage is simply a loan secured by your property — not a transfer of ownership.
Myth: “I could lose my home.”
Truth: You may stay in the home for life as long as you meet obligations including property taxes, insurance, and maintenance.
Myth: “Reverse mortgages are only for people in financial trouble.”
Truth: Many financially secure retirees use reverse mortgages strategically to:
- Boost cash flow
- Protect investments
- Create a long-term safety net
- Increase retirement flexibility
Myth: “My kids won’t inherit anything.”
Truth: Your heirs still inherit the home and any remaining equity. They can keep it, sell it, or refinance.
Myth: “Reverse mortgages should be a last resort.”
Truth: Modern HECMs are widely used as a proactive planning tool — often recommended by financial advisors, planners, and estate professionals.
Myth: “If my spouse isn’t on the loan, they’ll be forced to move.”
Truth: Protections exist for eligible non-borrowing spouses, allowing them to remain in the home after the borrower passes.
Myth: “Reverse mortgages are too expensive.”
Truth: Costs are similar to many other mortgage products — and they are typically financed into the loan. Most borrowers find the benefits significantly outweigh the costs.
Myth: “I won’t qualify without perfect credit.”
Truth: Qualification requirements focus on continued ability to maintain the home — not on credit scores.
Myth: “I might outlive the loan.”
Truth: As long as the home is your primary residence and you meet basic obligations, you cannot “age out” of your reverse mortgage.
Myth: “I can’t move if I want to.”
Truth: You can move anytime. Simply sell the home, pay off the loan balance, and keep any remaining equity. Or consider a HECM for Purchase loan to use that equity to buy a new home.
