Questions to Ask Before You Take Out a Reverse Mortgage

What You Need to Know Before Moving Forward

A reverse mortgage is a loan against your home that you don't repay while you live there — the lender gets paid back from the sale of your home or your estate after you die or move out permanently. Before you commit, you need to understand what it will actually cost you, what happens to your home and your heirs, and whether the money solves the problem you're trying to solve. The questions below are the ones that matter most, and you should get clear answers in writing before you sign anything.

This checklist is not a substitute for talking to a HUD-approved counselor, which federal law requires you to do anyway. But knowing what to ask means you'll get useful answers instead of a sales pitch.

Key Takeaways

• You must complete HUD-approved counseling before applying, and you should do this before meeting with a lender so you understand the costs and risks.
• Ask the lender for the total cost of the loan in dollars, including origination fees, insurance, interest, and closing costs — not just the interest rate.
• Understand that a reverse mortgage reduces or eliminates the equity your heirs inherit, and that you remain responsible for property taxes, insurance, and maintenance.
• Compare the loan amount you'd receive against what you'd pay back, because the total cost often exceeds what you borrow, especially in the first few years.
• Ask what happens if you can't pay property taxes or insurance, or if the home needs major repairs — these are common reasons people lose their homes after taking a reverse mortgage.

Questions About the Money You'll Receive

Start by understanding exactly how much money you'll actually get. Lenders advertise the maximum loan amount, but that's not what lands in your account. Ask the lender: "What is the net amount I will receive after all fees and closing costs are paid?" Get this number in writing.

Then ask: "How can I take the money — as a lump sum, monthly payments, a line of credit, or a combination?" Each option has different costs and different risks. A line of credit costs less upfront but more over time if you draw it slowly. Monthly payments are fixed, but you pay interest on money you haven't used yet. A lump sum is simpler but means you have to manage a large amount of money at once.

Ask also: "If I take a line of credit, what happens to the unused portion if I die or move?" Some programs let your heirs keep the unused credit; others don't. This matters if you're planning to leave money for your heirs or if you're uncertain how long you'll stay in the home.

Questions About What This Will Cost You

This is where reverse mortgages get expensive, and where lenders often gloss over the details. Ask for an itemized list of every cost: origination fee, appraisal fee, title search, insurance (called mortgage insurance premium, or MIP), closing costs, and interest rate. Ask the lender to show you the total cost in dollars over different time periods — 5 years, 10 years, and 15 years — not just the interest rate.

Ask specifically: "What is the mortgage insurance premium, and how much will it cost me over time?" This is a required insurance that protects the lender, not you, and it's often the largest cost after interest. It can be 0.55% to 2.05% of the loan amount per year, depending on the type of reverse mortgage.

Ask: "Will my interest rate be fixed or adjustable?" If it's adjustable, ask what the rate can rise to and how often it changes. An adjustable rate starts lower but can cost significantly more over time.

Finally, ask: "What is the break-even point — how long do I need to stay in this home for the money I receive to be worth more than the total cost?" If the answer is 12 years and you're 85, that's important information.

Questions About Your Home and Your Heirs

A reverse mortgage is a loan against your home, which means the lender has a claim on it. Ask: "What happens to my home if I die or move to a nursing home?" The loan becomes due, usually within six months. Your heirs can keep the home by repaying the loan, but they'll need to refinance or sell to do it. If the home is worth less than what you owe, your heirs inherit the debt, not the equity.

Ask: "Can my heirs stay in the home after I die?" Technically yes, but only if they can pay off the loan. Ask the lender to explain this in plain language, because it's often misunderstood.

Ask: "What if my home needs major repairs — a new roof, foundation work, or a new HVAC system?" You're responsible for maintaining the home, and if you can't, the lender can foreclose. This is a real risk for people on fixed incomes who take a reverse mortgage to cover living expenses.

Questions About Your Ongoing Responsibilities

Taking out a reverse mortgage doesn't mean the home is paid off. You still owe property taxes, homeowners insurance, and HOA fees if applicable. Ask: "What happens if I fall behind on property taxes or insurance?" The answer is usually that the lender can foreclose, taking the home to cover what you owe. This happens more often than most people realize.

Ask: "Will the lender monitor my property tax and insurance payments?" Some lenders set up an account to pay these from the loan proceeds, which protects you. Others don't, which means you have to manage it yourself. If you're taking a reverse mortgage because you're struggling financially, the first option is safer.

Ask: "What if I want to move or sell the home?" You can do both, but you'll have to repay the loan immediately. Ask what the payoff amount would be if you sold in 3 years, 5 years, and 10 years — this shows you how much interest and insurance will accumulate.

Questions About the Lender and the Loan Type

Not all reverse mortgages are the same. The most common is a Home Equity Conversion Mortgage (HECM), which is insured by the federal government and has consumer protections. Ask: "Is this a HECM or a proprietary reverse mortgage?" If it's proprietary, ask why the lender is recommending it over a HECM, because proprietary loans often have higher costs and fewer protections.

Ask: "How long have you been in business, and what is your complaint history with the Consumer Financial Protection Bureau?" You can check this yourself at consumerfinance.gov, but asking the lender directly tells you whether they're willing to be transparent.

Ask: "Can you provide references from people who took out a reverse mortgage with you in the last two years?" Be skeptical of any lender who won't or can't.

Questions to Ask Your HUD Counselor

Before you meet with a lender, you're required to meet with a HUD-approved counselor. This is free and takes about an hour. Use this time to ask: "Are there other ways to get the money I need — a home equity line of credit, a traditional refinance, or local assistance programs?" A counselor can tell you whether a reverse mortgage is actually the best option for your situation.

Ask: "What should I watch out for?" Counselors see the problems that come up later, and they can warn you about specific risks based on your age, health, and financial situation.

Ask: "If I decide to go forward, what questions should I ask the lender?" The counselor can help you understand which costs matter most and which red flags to watch for.

Red Flags That Mean You Should Stop and Reconsider

Walk away if a lender pressures you to decide quickly, tells you that you don't need to talk to a counselor, or suggests you take out more money than you need. Walk away if they can't explain the total cost in dollars or if they get annoyed when you ask detailed questions.

Walk away if you're primarily taking the reverse mortgage to pay off credit card debt, to help a family member, or because someone told you it's a way to get "assistance programs." These are the situations where reverse mortgages cause the most harm.

Walk away if you're not sure you can stay in the home long-term or if you're already struggling to pay property taxes and insurance. A reverse mortgage makes these problems worse, not better.

Frequently Asked Questions

Do I have to use a specific lender, or can I shop around?

You can shop around, and you should. Get quotes from at least three lenders and compare the total cost, not just the interest rate. Costs vary significantly, and a lower rate doesn't always mean lower total cost. Ask each lender for a Loan Estimate form so you can compare apples to apples.

What if I'm married — does my spouse have to be on the loan?

Your spouse can be on the loan or not, but this affects what happens after you die. If your spouse is not on the loan, they may have to repay it or move out after you die, even if they're still living in the home. Ask the lender to explain the implications for your specific situation before you decide.

Can I pay back a reverse mortgage early without a penalty?

Yes, you can repay a reverse mortgage at any time without penalty. However, you'll still owe all the interest and insurance that has accumulated. Ask the lender what the payoff amount would be at different points in time so you understand the cost of paying it back early.

What if I change my mind after I sign?

Federal law gives you three business days to cancel a reverse mortgage after you sign. After that, you can still pay it off, but you'll owe the full cost. Make sure you understand this timeline before you sign anything.

Will a reverse mortgage affect my Medicare or Medicaid?

A reverse mortgage itself doesn't affect Medicare, but it can affect Medicaid if you're receiving it. The money you receive counts as income or assets depending on how you use it. Ask your state Medicaid office or a benefits counselor before you take out a reverse mortgage if you're on Medicaid.