Can I make payments on a reverse mortgage?
There are no prepayment penalties on HECM Reverse mortgages and though reverse mortgages do not require the borrower to make mortgage payments there are some excellent reasons for doing so!
- Preserving equity - by making payments you are keeping down the principal balance. This will be appreciated by your heirs and on the off chance you do decide to sell in the future, your payoff will be lower.
- Building a line of credit - this only pertains to the adjustable rate reverse mortgage but is probably the best reason for making prepayments that I can think of. Not only do you reduce the principal balance of the loan, but on an adjustable reverse mortgage funds you pay on the loan are available for withdrawal again. This is because, the HECM Adjustable reverse mortgage is an “Open Ended” mortgage. Consider that the credit line on a reverse mortgage also carries with it a “growth rate”, so the higher you keep the available line of credit the more it grows over time making more funds available for you as you age. And that "older you" will appreciate your building that line of credit to provide for any needs that may arise.
In fact I think making payments on a reverse mortgage is a good strategy for younger seniors who are still working, so they can take advantage of the reverse mortgage program as it is today and continue to build equity in their home as well as a line of credit for future security.