Many seniors "downsize" into a smaller, more affordable home or apartment. After the purchase, they take out a reverse mortgage on the new property to get regular cash flow in retirement. However, that means they pay two sets of closing costs: one for buying the new home and one for getting the reverse mortgage.
If you or your parents have such plans, it’s possible to combine these two transactions into one, which could save thousands of dollars in closing costs. You are now allowed to buy a house or an apartment with a reverse mortgage instead of a regular mortgage. As is the case with any reverse mortgage, you won’t have to make any payments. (Reverse mortgages are repaid when you no longer live in the house.)
Also, federally-backed reverse mortgages, known as home equity conversion mortgages (HECMs) are non-recourse. That means you or your heirs will never owe more than the value of the home, no matter how many reverse mortgage payments you receive or how much the home is worth when repayment is due.
