For many homeowners in retirement, the house isn’t just a place to live – it’s their biggest financial asset. That’s where a reverse mortgage comes in. Unlike a traditional loan, which requires monthly payments, a reverse mortgage allows you to borrow against your home’s equity while staying put. Instead of paying the bank, the bank pays you.
These loans are generally for homeowners 62 and older, though some private lenders approve borrowers as young as 55. Money can be received in a lump sum, as monthly payments, through a line of credit or a mix of those options. Repayment only comes due when you sell the home, move out for more than a year, stop paying property taxes or insurance, can’t maintain the home or pass away.
The most common reverse mortgage is the Home Equity Conversion Mortgage (HECM), backed by the FHA and regulated by HUD. Borrowers must complete a counseling session to ensure they understand repayment rules, fees and long-term impacts. HECMs are non-recourse loans, meaning you’ll never owe more than the home’s value, but they do carry upfront and annual mortgage insurance premiums.
Other versions exist. A HECM for Purchase lets you buy a new home without monthly mortgage payments, though you’ll need a large down payment. Proprietary, or “jumbo,” reverse mortgages through private lenders may allow younger borrowers to access higher loan amounts but often come with higher rates. Single-purpose reverse mortgages, offered through some states or nonprofits, are limited to specific uses such as paying property taxes or funding home improvements.
Here in the San Bernardino Mountains, where median home values range from about $361,000 in Running Springs to $757,500 in Lake Arrowhead, reverse mortgages can unlock meaningful equity for long-time residents. For example, a Crestline homeowner with a home valued near $365,000 could potentially access over $150,000 in funds, depending on age, loan terms and existing debt. That money might cover medical expenses, safety upgrades to age in place or simply provide breathing room on a fixed income.
Still, reverse mortgages aren’t without drawbacks. Borrowers must keep up with taxes, insurance and home maintenance or risk foreclosure. Fees – including origination, closing costs and required insurance – can add up. And because the balance grows over time, heirs often inherit less. In fact, when the loan comes due, heirs must decide whether to sell the home, pay off the balance or let the lender take possession. Having those family conversations early can help avoid surprises.
The bottom line: A reverse mortgage isn’t free money. It’s a financial tool that can be useful for some homeowners but not for others. If you’re considering one here in Crestline, Lake Arrowhead or Running Springs, shop around, ask tough questions and speak with both a HUD-approved counselor and a trusted financial advisor before signing.
Theresa Grant is a real estate broker and columnist covering Lake Arrowhead, Crestline, Running Springs and the surrounding mountain communities. Reach her at (909) 442-1345, visit www.HomesInLakeArrowhead.com and follow her on social media, @TheresaGrantRealtor. Theresa is a Broker Associate with REAL Broker Technologies. DRE#01202881.
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