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Should I use a reverse mortgage to consolidate my debts?

Using a reverse mortgage loan to consolidate debt  can be risky because if you fail to meet your obligations with a reverse mortgage loan, you may lose your home to foreclosure.

If you take out a reverse mortgage loan to consolidate your debts, you are using the equity in your home to pay off existing creditors. Equity is the amount your property is currently worth, minus the amount of any existing mortgage on your property. 

What to know about consolidating debt with a reverse mortgage

  • A reverse mortgage is not free money. It is a loan where the borrowed money, interest, and fees must be paid back. The reverse mortgage loan you take out may end up costing you more than if you had just paid your debt payments.
  • If you use a reverse mortgage loan to consolidate your debt, your home equity may not be available when you’re older and more likely to have less income and higher healthcare bills.
  • Many people don’t succeed in paying off their debt by taking on more debt, unless they lower their spending.

Contact a nonprofit credit counselor

A nonprofit credit counselor can help you weigh your choices and help you to decide how you want to use credit in the future. This will help prevent future problems similar to what led you to consider debt consolidation. Also, talk to a HUD-approved reverse mortgage counseling agency before consolidating your debts with a reverse mortgage loan. HUD-approved reverse mortgage counseling agencies have the latest information on reverse mortgage loans and can help you make the best choice for you based on your financial situation and personal needs.

Note: This information only applies to Home Equity Conversion Mortgages (HECMs), which are the most common type of reverse mortgage loan.


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