There are three basic types of charges (other than interest) involved in setting up a reverse mortgage:

• an origination fee

• initial and monthly mortgage insurance premiums

• other closing costs

Some of these fees are payable at closing and some are added monthly to the loan balance.  

Interest Rate

Homeowners may choose either a fixed or an adjusting interest rate.  With the adjusting rate, any change in the interest rate has no effect on the amount or the number of loan advances that the borrower can receive but causes the loan balance to grow at faster or slower rate.

Loan Repayment

The loan is due and payable when the borrowers no longer occupy the property as their principal residence or fail to comply with the loan agreement.  The loan agreement states that the borrowers understand it is their responsibility to maintain the property and to pay the real estate taxes and hazard insurance premiums. 

The loan must be repaid in one payment - either from the sale of the home or through other resources.  There is no requirement that the property be sold, only that the loan is repaid.

Effect on Public Benefits

Loan proceeds are not considered income and will not affect Social Security, Medicare because these programs are not based on need. You need to check with the benefit specialist for that program.