Reverse Mortgages: What Homeowners Should Know

(A quick, practical guide for anyone 62+)

A reverse mortgage, formally a Home Equity Conversion Mortgage (HECM)—is a

type of loan backed by the FHA that lets homeowners tap into their equity without taking on a monthly mortgage payment. Instead, interest is added to the balance over time, and the loan is paid back when the home is sold, the borrower moves out permanently, or passes away.

For some homeowners, especially in high-equity markets like King and Snohomish

Counties, a reverse mortgage can create meaningful financial breathing room. For

others, it’s not the right fit.

Eligibility Starts at Age 62

Reverse mortgages are mostly driven by your age and your home value, not your

income or credit score.

At age 62, many homeowners qualify for access to roughly 40–50% of their home’s

value:

• $500,000 home, approx. $200,000–$250,000

• $1,000,000 home, approx. $400,000–$500,000

The rest of your equity stays in the home, acting as a built-in safety cushion.

Tip: The older the borrower, the higher the available loan amount.

Use the Funds However You Need

There are no restrictions on how funds are used. Common choices include:

• Paying off a current mortgage or eliminating monthly debt

• Covering in-home care, medical needs, or long-term support

• Supplementing retirement income

• Delaying Social Security to increase future benefits

• Buying a new home without a monthly mortgage payment

• Preserving investment accounts during market volatility

• Funding travel or meaningful family experiences

For many local homeowners, it’s less about “spending” and more about creating

flexibility during retirement years.

What Happens If the Market Drops?

This is the biggest question I hear.

Here’s the simplest way to think about it:

• If home values rise, you keep growing equity, even while the loan balance

grows.

• If values stay flat or fall, and the loan balance eventually exceeds what the

home is worth, FHA insurance covers the shortfall.

This means you and your heirs can never owe more than the home’s value at sale.

That’s the core consumer protection built into every HECM loan.

What’s the Catch?

Like any loan, reverse mortgages come with responsibilities:

• You must pay property taxes, insurance, and basic upkeep

• There are upfront fees and ongoing mortgage insurance premiums

• It reduces the equity available to heirs

A reverse mortgage isn’t “good or bad”—it’s a tool. The real question is whether it

supports your long-term goals.

Bottom Line

For some homeowners, a HECM reverse mortgage can:

• Improve cash flow

• Extend retirement savings

• Reduce financial stress

• Provide options in a stage of life where flexibility matters

  
  

Just like an atmospheric river can shift our local weather overnight, small financial

adjustments—whether in interest rates or through a tool like a reverse mortgage—can

reshape a homeowner’s outlook. Sometimes peace of mind comes from simply knowing

what options are available.