If I Do A Reverse Mortgage, Will The Bank Own My Home?

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Is there any truth to the argument that the bank owns your home if you do a reverse mortgage?

Actually, there is nothing different about a reverse mortgage, compared to a traditional mortgage when it comes to ownership. Your home becomes the collateral for the bank with either loan. Because you still own the home, you retain all the ownership rights. You are allowed to sell or refinance without any penalty at any time. In the event that you choose to sell your home, the lender will need to be paid off and any remaining equity will go to you or your heirs.

When the confusion comes up on this topic, it is usually because someone is thinking about a life estate. When you sell your home to an investor, and they let you live there for free for the rest of your life, this is called a life estate. With a reverse mortgage, you own the home and borrow against it. Don't confuse the two programs because they are not related at all.

Just because you do a reverse mortgage doesn't allow the State to take your home. As long as your taxes are current, they won't bother you. As a senior in Oregon, you should never lose a house to late taxes, since they allow you to defer your taxes indefinitely. You should do your reverse mortgage before your defer the taxes though, or you will have to reapply after your mortgage is completed.

Recapping, you keep ownership of your home. A reverse mortgage will never require you to give it up. The right to sell or refinance, while keeping any remaining equity, and do with it as you please, will always be yours.

The same rule applies to your heirs upon your passing. They inherit the home along with the mortgage and existing equity. If they want to keep the home, they will be required to pay off the existing mortgage. If the decision is to sell the home, any remaining equity will be theirs.
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