QUICK SUMMARY
The short answer is that a reverse mortgage can be a reasonable tool for some Alabama homeowners 62 and older, and a costly mistake for others, and the difference usually comes down to how long you plan to stay in the house. A Home Equity Conversion Mortgage lets you borrow against your equity with no monthly mortgage payment, but it is a loan, not free money. Interest and fees are added to the balance every month, so the balance grows and your equity shrinks. You still have to pay property taxes and homeowners insurance, keep the home in good repair, and live there as your principal residence. Before you borrow against the house, it is worth knowing what the house is actually worth and whether moving solves the problem more cheaply.
Reverse mortgage advertising has gotten very good at the emotional pitch: stay in the home you love, stop worrying about money, the equity is just sitting there. Some of that is fair. Some of it leaves out the part that matters most.
This is a plain walkthrough of how the loan actually works, the rules that trip people up, and the questions we would want answered before anyone in our market signed. It is not a sales page. The Williams Group at Keller Williams Realty does not originate mortgages of any kind, and nobody here earns anything if you get one.
Key takeaways.
1. You keep the title. The bank does not own your house. But the loan balance grows every month instead of shrinking.
2. Taxes and insurance are still yours. Falling behind on them is the most common way a reverse mortgage goes wrong.
3. Twelve months away can end it. An extended stay in a healthcare facility can make the loan due.
4. HUD counseling is mandatory, and it is free or low cost. Nobody can sell you a HECM without it.
5. The shorter you stay, the worse the math. Closing costs and insurance premiums are front-loaded.
What is a reverse mortgage, in plain words?
The kind almost everyone means is a Home Equity Conversion Mortgage, or HECM, which is insured by the Federal Housing Administration and available only to homeowners 62 and older.
You borrow against the equity in your home. The title stays in your name. You do not make monthly mortgage payments. Instead, interest and fees are added to the loan balance each month, so the balance goes up over time and your remaining equity goes down. The loan is repaid when you no longer live in the home, most often by selling it.
The Consumer Financial Protection Bureau puts it about as bluntly as a federal agency can: a reverse mortgage loan is not free money. Borrowed money plus interest plus fees each month equals a rising loan balance, and eventually you or your heirs pay it back.
For 2026, FHA set the HECM maximum claim amount at $1,249,125, which is 150 percent of the national conforming loan limit of $832,750. That figure applies to case numbers assigned between January 1 and December 31, 2026. Unlike regular FHA loans, there are no county-by-county HECM limits, so the number is the same in Tuscaloosa County as it is in Jefferson or Shelby. For almost every home in our markets, the cap is not the binding constraint anyway.
Who actually qualifies?
Age is only the first hurdle. Per the CFPB, you also need all of the following:
The home is your principal residence, meaning you live there the majority of the year.
You own it outright or have a low balance that gets paid off at closing, either from your own funds or from the reverse mortgage proceeds.
You are not delinquent on federal debt such as federal income taxes or federal student loans, though loan proceeds can be used to clear it.
You can cover ongoing property charges, or you agree to set aside part of the loan at closing to cover taxes, insurance, maintenance and repairs.
The house meets FHA property standards. If it does not, the lender will require repairs first.
You complete counseling with a HUD-approved agency covering your eligibility, the financial implications, and the alternatives. This is not optional and it is not a formality.
That last one is the single best consumer protection in the program. The counselor does not work for the lender and is not paid on whether you close. If a salesperson treats counseling as a box to check, treat that as information about the salesperson.
Before you borrow against it, find out what it is worth. Get a free home valuation, or call us in West Alabama at 205-292-2108 or Greater Birmingham at 205-292-7142.
What are the obligations that catch people out?
Three of them, and they cause most of the bad outcomes.
Property taxes and homeowners insurance stay your responsibility. No monthly mortgage payment does not mean no monthly housing cost. Falling behind on taxes or letting insurance lapse can put the loan in default. Given how much Alabama premiums have moved in recent years, this deserves a hard look at the front end rather than a hopeful estimate. Our Alabama homeowners insurance guide covers what drives those numbers.
You have to keep living there. The home must remain your principal residence and be kept in good condition. If you are away from the home in a hospital, assisted living, nursing home or rehabilitation center for more than 12 consecutive months, the loan can become due and payable unless there is a co-borrower or an eligible non-borrowing spouse still living in the house.
A spouse who is not on the loan is exposed. If your spouse or partner is not a co-borrower and you move out for the majority of the year, the loan has to be repaid, and the most common way that happens is selling the home, which means they move. There is an Eligible Non-Borrowing Spouse status under HUD rules that can let them stay, but the CFPB itself notes that qualifying can be difficult and suggests talking to an attorney or a HUD-approved counseling agency. If one spouse is under 62, this is the conversation to have before anything is signed, not after.
What happens to my kids and the house?
The loan becomes due and payable after the death of the borrower and of any co-borrower or eligible non-borrowing spouse. From there:
The clock is short. Once heirs receive a due and payable notice, they have 30 days to buy, sell or turn the home over to the lender. It may be possible to extend that up to six months so they can sell or arrange their own financing.
To keep it, they pay the full balance, usually by getting a loan of their own.
If the house is worth more than the balance, they can sell, repay the loan and keep the difference.
If the balance has grown past the value, they can satisfy the loan by selling for at least 95 percent of the appraised value. The rest is covered by the FHA mortgage insurance the borrower paid for all along.
That 95 percent rule is a real protection and it is worth understanding correctly: it means the family is not chased for a shortfall, not that the house passes to them free. The practical upshot is that a 30-day notice is a terrible time for your children to learn a reverse mortgage exists. If you get one, tell them, and tell them where the paperwork is.
Is there an Alabama angle most people miss?
Yes, and it is a good one. Since the most common way a reverse mortgage fails is unpaid property taxes, it is worth knowing that many Alabama homeowners 65 and older are entitled to a property tax break they have never claimed.
Under the Alabama Department of Revenue’s homestead exemption rules, a homeowner age 65 or older with net taxable income of $12,000 or less on the combined federal return can be exempt from all ad valorem property taxes. A homeowner 65 or older whose Alabama income is above that threshold is still exempt from all of the state portion of the ad valorem tax and receives the regular county homestead exemption. There is also a full exemption for homeowners who are permanently and totally disabled, with no income limit at any age.
The catch is that these are not automatic. You apply at your county office, and the home has to be your owner-occupied primary residence on the first day of the tax year. We have watched homeowners in both our markets carry a tax bill for years that they did not actually owe.
If the pressure to borrow is coming from a monthly budget that is $200 short, checking your exemption status is a free phone call and it might close some of the gap before you take on a loan. Our guide to Alabama property taxes and the homestead exemption walks through how to claim it.
When does a reverse mortgage actually make sense?
There are real cases. The pattern they share is a long expected stay in a house the owner genuinely wants to keep.
It tends to work better when you are meaningfully past 62 rather than just barely eligible, when the house fits how you live now and will still fit in ten years, when you can comfortably carry taxes, insurance and upkeep, when leaving the house itself to your children is not the priority, and when you are solving a structural shortfall rather than patching a temporary one.
It tends to work badly in the mirror image of that. The costs are front-loaded, so a short stay is expensive per year. The CFPB makes the point about timing directly: take one out too young and you may run out of money later, when income is lower and health costs are higher.
And it is not the only option. The CFPB’s own list of alternatives is worth reading before you commit: waiting, a home equity loan or line of credit, refinancing into a shorter-term traditional mortgage, lowering expenses through state and local assistance programs, and downsizing. Selling and moving to a home that costs less to own is the alternative reverse mortgage advertising never mentions, because there is no product to sell you at the end of it.
NEXT CHAPTER HOUSING ASSESSMENT
Is the question really about money, or about whether this house still fits? Dan built the free Next Chapter Housing Assessment for homeowners 55 and older to help you answer one question: does your home still fit the life you want over the next 5, 10 or 15 years? It takes about 10 minutes, there is no sales pitch, and your answers stay on your device.
What should I do before I talk to a lender?
Four things, in this order.
1. Find out what the house is worth. Every number in this decision, including how much you can borrow and what your family ends up with, runs off the value. An estimate off a website is not good enough for a decision this size.
2. Check your homestead exemption. Call the county. It is free and it takes one call.
3. Price the alternative honestly. What would you net if you sold, and what would a home that fits you now actually cost to own? Sometimes that math is worse than staying. Sometimes it is dramatically better, and either way you should see the number.
4. Then get your HUD counseling and go into it with real figures instead of guesses.
Steps one and three are the parts we can help with, and they are the parts nobody selling a loan will do for you. That is the whole reason we would ask you to call us first. We are not going to tell you whether to get a reverse mortgage, because that is a decision for you, your family and a HUD counselor. We can tell you exactly what the house would bring, what selling it would cost, and what your realistic options are in this market, so that whatever you decide, you decide it with the real numbers in front of you.
How do I avoid the scams?
Two warnings come straight from the CFPB and are worth repeating word for word in substance.
Be careful with contractors who bring it up. If someone knocking on your door about repairs also suggests a reverse mortgage to pay for them, that is a known scam pattern. Do not let yourself be pressured.
The VA does not offer reverse mortgages. Ads that promise veterans a special deal, imply VA approval, or dangle a no-payment reverse mortgage are misrepresenting the product.
One more protection worth knowing: with most reverse mortgages you have a three business day right of rescission after closing. You can cancel for any reason without penalty by notifying the lender in writing. Send it certified mail with a return receipt, keep copies, and note that the lender then has 20 days to return what you paid to finance the loan.
Frequently asked questions
Does the bank own my house if I get a reverse mortgage?
No. With a reverse mortgage the title to your home stays in your name, the same as with a traditional mortgage. The lender has a lien, not ownership. What does change is the direction of the balance: it grows over time instead of shrinking, so your equity decreases.
Can I sell my house if I have a reverse mortgage?
Yes. You can sell at any time. The loan is repaid out of the proceeds at closing, and anything above the balance is yours. This is worth knowing because some homeowners believe a reverse mortgage locks them into the house permanently. It does not. If you are thinking about it, our guide to the cost to sell a house in Alabama covers what comes out of the proceeds.
Do I still pay property taxes with a reverse mortgage in Alabama?
Yes. Property taxes and homeowners insurance remain your responsibility, and falling behind can put the loan in default. Alabama homeowners 65 and older should also confirm which homestead exemption they qualify for, since it can reduce or in some cases eliminate the ad valorem bill, and it has to be claimed at the county office.
What if my spouse is younger than 62?
Then they cannot be a co-borrower, and that is a significant risk to understand up front. A non-borrowing spouse may be able to remain in the home under HUD’s Eligible Non-Borrowing Spouse rules, but the CFPB notes that qualifying can be difficult and recommends consulting an attorney or a HUD-approved counseling agency. Raise this specifically in your counseling session.
Where do I find a HUD-approved reverse mortgage counselor?
HUD keeps a public lookup of approved HECM counseling agencies, and the CFPB maintains a find-a-housing-counselor tool. Both are linked in the sources below. Counseling is required before a lender can proceed, and the counselor is independent of the lender.
Does The Williams Group offer reverse mortgages?
No. We are a real estate team, not a lender or a mortgage counselor, and we do not originate or sell any loan product. What we can do is tell you what your home is worth today, what it would cost to sell, and what your options look like in the current market, so you have real numbers before you make the decision.
This article is general information, not financial or legal advice. We are not licensed financial advisors, mortgage lenders or housing counselors. Program rules and figures change. Confirm anything here with a HUD-approved counselor, your lender and your own advisors before making a decision.
Sources
CFPB, What is a reverse mortgage?
CFPB, Can anyone take out a reverse mortgage loan?
CFPB, Can my heirs keep or sell my home after I die?
CFPB, What happens if I have to move out of my home?
CFPB, Find a housing counselor
HUD, HECM counseling agency lookup
HUD Mortgagee Letter 2025-22, 2026 HECM Limits (December 11, 2025)
Alabama Department of Revenue, Homestead Exemptions
Last updated: September 2026.
Thinking about a reverse mortgage? Call us first.
Not to talk you into or out of it. We will tell you what your home is worth, what selling would actually net, and what your options are, so you can make the call with real numbers. No pressure, no obligation.
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