Laurie Bisi

Mortgage Loan Originator

NMLS: 245709

Is A Reverse Mortgage Better Than A Traditional Mortgage?

Reverse mortgage versus a traditional mortgage --is one better than the other? The answer is that it depends on the situation. They have many similarities, but there are a few key differences that make reverse mortgages a better choice than a traditional mortgage. Or vice versa.

This article breaks down the basics of these two types of home loans to give you a general idea of when to choose one over the other. Because every situation is unique, we encourage you to call us for personalized and honest home loan assistance.

Similarities Between Reverse Mortgages and Traditional Mortgages

One similarity that these home loans share is that they both allow you to borrow money based on your home equity. Both loans are also available with a few different options such as a fixed or adjustable rate or may government insured. An example of a traditional home loan that is insured by the government is an FHA loan while an example of a government-insured reverse mortgage is a HECM.

Differences Between Reverse Mortgages and Traditional Mortgages

The most notable difference is that there are no monthly payments required on a reverse mortgage. You pay as little or as much as you want when you want. This payment option is possible with a reverse mortgage because it works mainly by borrowing money against a home that you already own. With a traditional loan, you borrow money from a lender and promise to pay it back, plus interest, over several years.

A reverse mortgage is most often used to get cash out of your home. Although you can get cash out when you refinance with a traditional loan, most often people will refinance to a conventional loan to lower their monthly payments or get a lower interest rate.

When it comes to paying back the loan, with a traditional mortgage you pay it back every month for several years, as we mentioned above. However, with a reverse mortgage, you can choose to make monthly payments, pay off the loan through the sale of your home, or at your passing.

Which Loan is Right for You?

If you’re over the age of 62 and are looking at you home loan options, a reverse mortgage may seem pretty attractive. In many cases it is a better choice, but not always. Investments, lifestyle, immediate financial needs, and what you plan to in your trust for your beneficiaries are all items to consider before deciding on one option over the other.

If you are investigating these options for a parent of retirement age rather than for yourself, please forward this information to your parents. We've earned a reputation of trust and steadfastness --you can confidently recommend our home loan services to your family and friends. 

Have more questions? Please contact us using the form on our website or call to live mortgage help.


* Specific loan program availability and requirements may vary. Please get in touch with your mortgage advisor for more information.