Reverse mortgages and EquitySelect from HighTechLending
How does a reverse mortgage work?
That is the whole idea in three sentences. Below is what actually happens, step by step, plus the part most articles leave out: what you still owe every month, and the option that fits a lot of homeowners better.
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The four things that happen
A reverse mortgage is a loan secured by your home. What makes it different is the direction the money moves and when repayment comes due.
Your borrowing amount is set
The lender calculates how much of your equity you can access. Three things drive it: the age of the youngest borrower, your home's appraised value, and current interest rates. Older borrowers and more valuable homes qualify for more.
Any existing mortgage is paid off first
A reverse mortgage has to sit in first position, so the proceeds retire your current loan before anything comes to you. For many homeowners this is the main appeal. The monthly mortgage payment disappears on day one.
You take what is left, your way
A lump sum, fixed monthly payments, a growing line of credit you draw on as needed, or a combination. The line of credit is the option most people do not know exists, and the unused portion grows over time.
The balance is settled at the end
Interest is added to the balance rather than billed monthly, so the amount owed rises over time while your remaining equity falls. Repayment comes due when the last borrower sells, permanently moves out, or passes away. Heirs typically sell the home, refinance it, or keep it by paying off the loan.
- Minimum age
- 62 for a federally insured HECM. Some proprietary and jumbo programs start at 55 or 60, depending on the state.
- Credit and income
- There is no payment history to qualify on, but there is a financial assessment confirming you can keep up with taxes, insurance, and upkeep.
- Who holds title
- You do. The lender records a lien, exactly as with any mortgage.
- Counseling
- Required. An independent HUD approved counselor reviews the loan with you before an application can proceed.
- Owing more than the home is worth
- HECMs are non recourse. Neither you nor your heirs owe more than the home's value at the time of sale.
What you still have to do
No monthly mortgage payment does not mean no obligations. This is the part worth reading twice, because it is where problems start for the small number of borrowers who run into trouble.
You remain responsible for three things
- Property taxes and homeowners insurance, paid on time, every year.
- Maintaining the home in reasonable condition.
- Living in the home as your primary residence.
Falling behind on any of these can trigger default and, in the worst case, foreclosure. Any lender who does not raise this with you early is not doing their job.
Is it the right tool for you?
Honest answer: sometimes yes, sometimes no. The structure that makes a reverse mortgage powerful, no required payment and a balance that grows, is exactly what makes it a poor fit for other people. Here is the split we see every day.
A reverse mortgage usually fits when
- You are 62 or older and plan to stay in the home long term
- Monthly cash flow is tight and removing a payment would change your life
- You have significant equity and limited other retirement income
- Leaving the home to heirs is not a primary goal
It is usually the wrong tool when
- You are under 62, or your spouse is
- You may move or sell within a few years
- You want to preserve equity for your children
- You have a low rate on your current mortgage and want to keep it
- You only need occasional access to cash, not a large payoff
If you recognized yourself in the right hand column, there is a second option most lenders will not mention, because most lenders do not offer it.
What an EquitySelect loan is
EquitySelect is a home equity line of credit that sits behind your existing mortgage. You keep your first mortgage and its rate. You draw only what you need, when you need it. There is no minimum age requirement.
That last point matters more than it sounds. A reverse mortgage requires you to be 62. EquitySelect does not, which puts it in reach for homeowners in their fifties and for couples where one spouse is too young to qualify.
And because it is a second lien, you are not giving up the low rate you locked in years ago. For a great many homeowners, that single fact decides the whole question.
How EquitySelect works
We size the line against your available equity
Your home value, minus what you owe on the first mortgage, minus the equity cushion the program requires. What is left is the credit line we can extend.
Your first mortgage stays exactly where it is
No refinance, no new closing on the loan you already have, no resetting the clock or the rate. EquitySelect records in second position behind it.
You draw when you want to
Take nothing and the line simply sits there. Draw for a roof, a medical bill, a bridge to a better market. You are charged interest on the balance you have actually drawn, not on the full line.
You qualify on a capped payment, over a long runway
Terms run up to 40 years, which keeps the required payment far lower than the 5 or 10 year structures common on second liens. The rate is variable and indexed to SOFR, so it moves with the market.
- Lien position
- Second. Your existing first mortgage is untouched.
- Minimum age
- None.
- Rate
- Variable, indexed to SOFR. [ADD CURRENT MARGIN, INDEX, APR RANGE, AND CAPS. Do not launch this line without approved numbers.]
- Maximum term
- Up to 40 years.
- Recourse
- Non recourse.
- Draw period
- [CONFIRM DRAW PERIOD AND ANY MINIMUM INITIAL DRAW]
The tradeoff you need to weigh
Two things make EquitySelect riskier than it first appears, and we would rather you hear them from us:
- The rate can move. It is tied to SOFR, so your payment is not fixed for the life of the loan the way a first mortgage payment is.
- Unpaid interest can be added to the balance. A balance that grows through the term can leave a large amount due at maturity. Plan for the end of the term, not just the first few years.
A licensed specialist will model this with your actual numbers before you commit to anything.
The two, side by side
Neither product is better in the abstract. They solve different problems.
| Feature | Reverse mortgage (HECM) | EquitySelect |
|---|---|---|
| Minimum age | 62 | None |
| Your current mortgage | Paid off and replaced | Stays in place at its existing rate |
| Monthly payment | None required | Required on what you draw |
| Rate type | Fixed or adjustable, depending on program | Variable, indexed to SOFR |
| Access to funds | Lump sum, monthly draws, or a growing credit line | Draw as needed from the line |
| Effect on your equity | Declines as interest is added to the balance | Preserved if you pay interest as it accrues |
| Term | Open ended until sale, move out, or death | Up to 40 years |
| Counseling required | Yes, HUD approved | No |
| Can you owe more than the home is worth | No, non recourse | No, non recourse |
| Main risk to watch | Taxes, insurance, and occupancy requirements | Rate movement and a growing balance at term |
Not sure which column you belong in? That is the conversation to have. Answer four quick questions and a licensed specialist will run both side by side with your real numbers, at no cost.
Questions we get every day
Can the bank take my house?
You keep the title and the deed. The lender records a lien, the same as with any mortgage. Foreclosure only becomes a risk if you stop paying property taxes or homeowners insurance, let the home fall into disrepair, or stop living there as your primary residence.
What happens to my children?
When the loan comes due, your heirs choose: sell the home and keep whatever is left after the balance is paid, refinance into their own loan and keep the house, or walk away. Because these loans are non recourse, they never owe more than the home is worth.
My spouse is under 62. Are we out of luck?
Not necessarily. There are protections for eligible non borrowing spouses on a HECM, and EquitySelect has no minimum age at all, which is often the cleaner answer for couples with an age gap.
Will this affect my Social Security or Medicare?
Loan proceeds are borrowed money, not income, so Social Security and Medicare are generally unaffected. Need based programs such as Medicaid and SSI can be affected by how long you hold the funds. Ask a benefits counselor about your own situation.
What do the words on this page mean?
Equity. What your home is worth today, minus what you still owe on it.
Lien. The lender's legal claim on the home until the loan is repaid. You still own the house.
Non recourse. You and your heirs can never owe more than the home is worth when it is sold.
HECM. Home Equity Conversion Mortgage, the federally insured reverse mortgage. Said out loud as "heck-um."
How much does it cost to find out?
Nothing. There is no credit pull to get your figures and no obligation. You will get a real number and an honest read on which product, if either, makes sense.
Why talk to you instead of a broker?
We are a direct lender, so there is no middleman marking up your file or shopping it around. We underwrite and fund in house, which is also why we can put both a reverse mortgage and EquitySelect in front of you rather than only the one product we happen to sell.
Get your numbers, then decide
Four quick questions is all it takes to see what your equity may make available under both programs. No credit pull, no obligation, no pressure.
Or call (866) 243-5906, [HOURS, e.g. 7am to 5pm PT, seven days a week].
