Reverse mortgages can be a powerful financial tool for older homeowners—but misconceptions often prevent people from considering them. At MortgageWorks, we’re committed to cutting through the confusion. Whether you’re exploring retirement options or helping a loved one make informed financial choices, it’s time to separate fact from fiction.
In this guide, we’ll debunk common reverse mortgage myths with expert insight, real-world examples, and actionable advice tailored for Coachella Valley residents.
A reverse mortgage—officially known as a Home Equity Conversion Mortgage (HECM)—is a government-insured loan that allows homeowners aged 62 or older to convert part of their home equity into cash. Unlike a traditional mortgage, borrowers aren’t required to make monthly payments. Instead, the loan is repaid when the homeowner sells the home, moves out, or passes away.
One of the most persistent myths is that the bank takes your home. This is false. With a reverse mortgage, you remain the owner. The lender simply places a lien on the property, much like a traditional mortgage, to secure the loan.
“Homeowners maintain full title to their property and can sell it or refinance at any time,” says Art Alvarez, MortgageWorks’ reverse mortgage specialist.
Example: A Palm Desert couple used a reverse mortgage to supplement their retirement income. Years later, they downsized and sold the home—retaining the remaining equity after repaying the loan.
Your heirs are not personally responsible for repaying more than the home is worth—even if the loan balance exceeds market value.
The Federal Housing Administration (FHA) insures HECMs to protect both borrowers and heirs.
Key Fact: If the home sells for less than the loan balance, FHA covers the difference—not your family.
Today’s retirees are using reverse mortgages as part of a diversified retirement plan. Common uses include:
Delaying Social Security to maximize benefits
Creating a tax-free emergency fund
Covering long-term care or in-home assistance
Funding home renovations to age in place
Case Study: A homeowner in Rancho Mirage used her reverse mortgage to retrofit her home with accessibility features, allowing her to live independently for an additional decade.
Like any mortgage, reverse mortgages include closing costs, insurance, and interest. But the long-term benefits often outweigh the upfront expenses—especially when used strategically.
According to the National Reverse Mortgage Lenders Association (NRMLA), the average closing cost is between 2%–5% of the home’s value, depending on the loan amount and lender.
At MortgageWorks, we break down every cost up front, so there are no surprises.
Your home may still appreciate in value, even with a reverse mortgage. And if you borrow only a portion of your equity, your heirs can still inherit remaining value.
We encourage families to involve adult children in the decision-making process. At MortgageWorks, we offer free family consultations so everyone is on the same page.
From monthly disbursements to lines of credit, homeowners can choose how they receive funds. Some opt for a lump sum to pay off existing debt, while others set up a credit line that grows over time.
Pro Tip: A line of credit option grows year-over-year—giving you access to more equity in the future even if your home’s value doesn’t change.
No. Reverse mortgage proceeds are considered loan advances, not income, so they’re not taxed.
No. As long as you live in the home, keep it in good condition, and pay property taxes and insurance, you can stay indefinitely.
Yes, but you must use part of the reverse mortgage proceeds to pay off the existing loan first.
You retain full homeownership with a reverse mortgage.
Your heirs are protected from owing more than the home’s value.
Reverse mortgages can be strategic tools for retirement planning.
They are flexible, customizable, and FHA-insured.
Work with local experts like MortgageWorks to get personalized advice.
If you’re curious about whether a reverse mortgage is right for you—or just want straight answers—MortgageWorks is here to help. Our experienced advisors live and work right here in the Coachella Valley, and we’ll guide you with clarity, transparency, and care.
???? Call us today for a free consultation or visit our website to learn more. 760-969-5023
We've been helping customers afford the home of their dreams for many years and we love what we do.
Company NMLS: 337037
www.nmlsconsumeraccess.org
777 E. Tahquitz Canyon Way, Suite 200-47
Palm Springs, CA 92262
Phone: 760-969-5023
Fax: 760-969-5024
art@mwloan.com
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