The expenses that are financed into the loan can be quite considerable (the origination fee, mortgage insurance premium, and ongoing interest). However, the only out-of-pocket expenses are the counseing and appraisal ($125 and $450, respectively).

Banks seek to make loans and earn interest not to own property; consequently, the bank does not purchase the home. Instead, the bank adds a lien onto the title so that it can eventually collect the amount loaned plus interest.

The estate does inherit the home but there will be a lien on the title. The amount of the lien is the sum received from the reverse mortgage plus interest.

For example, if someoneone with a $250,000 home passes away and leaves a reverse mortgage balance of $80,000, then the estate would sell the home for $250,000, repay $80,000 to the bank, and keep the $170,000 difference.

As a "non-recourse" loan, the only asset guaranteeing the reverse mortgage is the property and not the whole estate. So, if the home sells for less than the reverse mortgage balance, the estate is not responsible for making up the difference.

The reverse mortgage exists specifically to allow homeowner to age in place for the rest of their lives. The homeowner can not be evicted or foreclosed for non-payment. However, the homeowner must still maintain the property and keep current on insurance and taxes.

A reverse mortgage is only due when all homeowners have passed away or permanently moved out.

Entitlement programs like Social Security and Medicare are not affected. However, need-based programs like Medicaid can be affected if the homeowner withdraws more funds from a reverse mortgage than the program's income limits allow.

Proceeds are not considered income and are not taxable. The interest is tax deductible when the loan is repaid.