United States
Hong KongReverse mortgages explained
A Home Equity Conversion Mortgage requires the youngest borrower to be at least 62, mandatory counseling, and continued payment of taxes and insurance. It becomes due when the borrower dies, sells, or ceases to occupy the home.
A loan that runs backwards. The borrower receives money and the balance grows rather than shrinking.
The eligibility rules
The youngest borrower must be at least 62. The property must be the principal residence. Mandatory counseling from an approved counselor comes before the application proceeds.
Sixty-two is the number the exam wants.
What the borrower still owes
Property taxes, homeowners insurance and maintenance. These are not suspended, and failing them can cause default.
Not through the loan itself but through unpaid taxes and insurance. A borrower who stops paying them can face foreclosure on a loan with no monthly payment, which is counterintuitive enough to make a good question.
When it becomes due
- The last surviving borrower dies
- The home is sold
- The borrower ceases to occupy it as a principal residence, generally for more than twelve months
- Taxes, insurance or maintenance obligations are not met
Non-recourse
A HECM is non-recourse. If the balance exceeds the value of the home at repayment, neither the borrower nor the estate owes the difference.
That protection is a defining feature and it is asked about directly.
Ability to repay does not apply
Reverse mortgages are excluded from the ability-to-repay rule, because the repayment logic runs the other way.
They have their own financial assessment instead, looking at whether the borrower can sustain taxes and insurance.
Common questions
What is the minimum age for a reverse mortgage?
62 for the youngest borrower on a Home Equity Conversion Mortgage.
Is counseling required?
Yes. Counseling from an approved counselor is mandatory before the application proceeds.
What does the borrower still have to pay?
Property taxes, homeowners insurance and maintenance. Failing these can cause default.
What does non-recourse mean here?
If the balance exceeds the home's value at repayment, neither the borrower nor the estate owes the difference.
Does ability to repay apply?
No. Reverse mortgages are excluded, and a separate financial assessment applies instead.