If you take out a reverse mortgage loan your children won't be left with any of the home equity.
While the amount of equity typically decreases over time with a reverse mortgage, it doesn't mean there will be no equity left when the last borrower dies. There are several factors that go into how much equity will be left, such as home appreciation, length of the loan, and optional monthly payments. There can still be equity left for your children.
A reverse mortgage requires that you make monthly mortgage payments.
While you can choose to make mortgage payments, they are not required with a reverse mortgage. The borrower is still responsible to maintain the property, pay property taxes, homeowners insurance, flood insurance, and homeowners association dues (if applicable).¹
You are not allowed to sell your home if you have a reverse mortgage.
You can sell your home if you wish and - just like any other mortgage loan - you must pay off the reverse mortgage at closing. There are also no prepayment penalties if you choose to pay off your loan early or make loan payments.
I’m not eligible because I don’t have enough income.
No. You don’t have to earn a certain amount of money. Rather, you need to show you have the financial ability and willingness to pay your ongoing property taxes, homeowners insurance, and other property-related expenses.
¹There are some circumstances that will cause the loan to mature and the balance to become due and payable. The borrower is still responsible for paying property taxes, homeowner’s insurance and maintaining the property to HUD standards. Failure to do so could make the loan due and payable. Credit is subject to age, income standards, credit history, and property qualifications. Program rates, fees, terms, and conditions are not available in all states and subject to change.
²Borrowers should seek professional tax advice regarding reverse mortgage proceeds.