Solano Real Estate Scene: Jim Porter
Article By: Jim Porter – September 19, 2025
One of my readers called me this week and mentioned that I should tell people about the downsides of a reverse mortgage.
Something like 80% of the time, people that inquire about a reverse with me, don’t go for one and the 20% that do move forward after hours of education, including government required counseling. It is usually life-changing for the seniors that take advantage of one of the many options.
The most popular is the reverse home equity conversion mortgage line of credit for seniors that want monthly cash flow now or in the future when their IRAs start to run low.
Here are my Top 5:
• Less equity for your heirs when you die and they inherit the house.
• Some reverse mortgage loans have high loan fees and expensive non-refundable mortgage insurance premiums that goes to the FHA insurance fund.
• You cannot move out of your home for more than six months without written permission from the lender, and you can never convert the home to a long-term rental property.
• The loan balance grows every month because monthly payments are not required, which means you will have less money to use for your next house if you sell to move up, down or away. And if you die, the kids get less money than they hoped for over the years. (Note: the unused portion of the home equity conversion mortgage line of credit grows every month, which is why so many American seniors and financial advisers like this product.)
• Many people don’t move forward on a reverse mortgage because the ethical loan officer advises them to do something else like sell and move down because the senior cannot afford to pay the property taxes, insurance, utilities and home maintenance. If a homeowner with a reverse falls behind on property taxes and home insurance, the homeowner will need to sell or face foreclosure.
Some seniors should sell the giant house and move down to a less expensive house and bring their low property tax rate with Proposition 19 to a more affordable home to maintain. Some may want to do a reverse mortgage purchase on the new house and pocket some of the sale proceeds.
To summarize, the reverse mortgage is not the greatest thing since sliced bread, but like my buddy Tom Selleck has said for years representing my primary reverse funding source, Finance of America, they do not want your house. It’s true, lenders just want the interest and the fees. The last thing a lender ever wants is the house.
Jim Porter, NMLS No. 276412, is the branch manager of Solano Mortgage, NMLS No. 1515497, a division of American Pacific Mortgage Corporation, NMLS No. 1850, licensed in California by the Department of Financial Protection and Innovation under the CRMLA / Equal Housing Opportunity. Jim can be reached at 707-449-4777.
