Should You Pay Off a Reverse Mortgage with Savings?

For many homeowners over the age of 62, reverse mortgages offer a way to access home equity without selling the property or taking on monthly loan payments. But once the loan is active, a new question often arises: Should I use my personal savings to pay off this reverse mortgage—or just let it run its course?

Let’s walk through this question carefully. No flashy promises. Just facts, insights, and what real people are considering as they navigate retirement.

A Quick Look at How Reverse Mortgages Work

If you're reading this, you may already know the basics—but here's a quick refresher.

A reverse mortgage allows homeowners to borrow against their home equity while continuing to live in the property. Unlike traditional mortgages, borrowers don’t have to make monthly payments. Instead, the loan is repaid when the borrower moves out, sells the home, or passes away. Funds can be received in a lump sum, line of credit, or monthly payments—each option coming with its own implications.

The reverse mortgage definition is pretty straightforward, but the financial decisions surrounding it are anything but simple.

Paying It Off Early: Sounds Smart, Right?

There’s a natural instinct to want to eliminate debt—especially during retirement. Some folks think, “If I can just use my savings to pay off the balance, I’ll have peace of mind.”

That makes sense on the surface, but it raises more questions than answers:

• How much savings would this use up?

• Would I still have enough for emergencies or medical costs?

• Would paying it off improve my monthly cash flow… or reduce it?

  
  

One of the reverse mortgage facts that surprises many: You’re not required to make monthly payments. Ever. You can, but it’s optional. That flexibility is part of what makes this loan unique.

So unless there’s a clear benefit to paying it off early—like qualifying for another type of loan or settling an estate—it may not always make sense to drain personal savings to do it.

Savings: A Safety Net, Not Just a Number

Here’s something to keep in mind: savings are more than just an amount in your bank account. They represent your ability to make choices, cover unexpected expenses, and support your quality of life during retirement.

Let’s say someone has $200,000 in retirement savings. They consider using half of that to pay off a reverse mortgage. Sure, the balance is gone—but so is half the safety net. That tradeoff isn’t always worth it, especially if the loan isn’t causing monthly stress.

At Penny Lane Financial, many clients who inquire about reverse mortgages are doing so not because they’re out of options—but because they want retirement income options that give them more breathing room. Having access to home equity and keeping savings intact can offer more flexibility than choosing one over the other.

Check Your Elegibility

What Happens If You Just Let It Ride?

If you choose not to pay it off early, here’s what you can expect:

• Interest continues to accrue, and the loan balance grows over time.

• You keep living in your home, just like before.

• You still own your home—you’re just using a portion of its equity.

• Your heirs will still have options: they can sell the home to pay off the loan or refinance it if they wish to keep it.

  
  

Most reverse home mortgages don’t come due until a maturity event occurs—meaning there’s no rush to pay them off unless you want to.

For those wondering about exact numbers, there are tools like a reverse mortgage calculator without personal information that can help estimate how your balance might grow over time.

Real Talk: People Have Mixed Feelings

Some folks feel uneasy about owing money on their home—even if they’re not making payments. That’s understandable. Others see it more like a tool: one that can help them stay in their home longer, afford rising healthcare costs, or support family members when needed.

The key is knowing your personal goals. If your priority is maintaining liquidity and flexibility, keeping the reverse mortgage in place may align better with your strategy.

If you’re more focused on leaving the home debt-free to heirs or reducing future interest costs, partial payments might make sense—without needing to zero out the balance completely.

What the Numbers Say

According to data from the National Reverse Mortgage Lenders Association (NRMLA), the average reverse mortgage loan balance is under $100,000. And yet, the average homeowner aged 62+ in the U.S. holds over $300,000 in home equity.

This means most reverse mortgage users are not borrowing the full value of their home—they’re tapping into just enough to support their lifestyle while keeping options open.

If you’re using a reverse mortgage calculator, you’ll likely see this trend reflected: even modest borrowing can provide meaningful cash flow.

A Thoughtful Approach to Retirement

The decision to pay off a reverse mortgage—or keep it going—depends on your needs, not just the math.

At Penny Lane Financial, we believe in helping clients explore retirement solutions that match their real-world concerns—not hypothetical scenarios. No two households are the same, and there’s no one-size-fits-all answer.

If you’ve been weighing whether to use savings or keep your reverse mortgage active, you're not alone. And you're not without support. You might also enjoy this related article: Protect Your Family’s Inheritance with a Reverse Mortgage. It explores how a reverse mortgage can support long-term goals while keeping your loved ones in mind.