5 Reverse Mortgage Myths That Cost Homeowners Real Money

Reverse mortgages aren't right for everyone, but the rumor mill around them is full of half-truths. Let's separate fact from fiction.

Myth #1: 'The bank takes your house.' False. With a HECM (the FHA-insured product), you retain title. The lender places a lien — same as any mortgage — and is repaid when the home is sold.

Myth #2: 'Your heirs get nothing.' Heirs inherit the home and any equity beyond the loan balance. They can sell, pay off the loan, or keep it by refinancing.

Myth #3: 'You can owe more than the home is worth.' HECMs are non-recourse loans, meaning you (or your heirs) can never owe more than the home's appraised value at sale. The FHA insurance covers the difference.

Myth #4: 'Fees make it not worth it.' Origination, mortgage insurance, and closing costs are real and can total 4–6% of the loan. That's why reverse mortgages make most sense when you plan to age in place for 7+ years.

Myth #5: 'It affects Social Security and Medicare.' Reverse mortgage proceeds are loan disbursements, not income — they don't affect SS or Medicare eligibility. They *can* affect Medicaid and SSI, so plan accordingly.