Some folks will use it to pay for bills, getaways, home restorations or perhaps to settle the remaining quantity on their regular mortgagewhich is nuts! And the repercussions can be huge. HECM loans are kept on a tight leash by the Federal Housing Administration (FHA.) They don't want you to default on your home mortgage, so because of that, you won't qualify for a reverse home mortgage if your home deserves more than a certain amount.1 And if you do receive an HECM, you'll pay a significant home loan insurance premium that safeguards the lending institution (not you) against any losses - which type of organization does not provide home mortgages?.They're provided from privately owned or run business. And since they're not managed or guaranteed by the federal government, they can draw homeowners in with guarantees of higher loan amountsbut with the catch of much higher interest rates than those federally guaranteed reverse home loans. They'll even use reverse mortgages that allow property owners to borrow more of their equity or include houses that go beyond the federal maximum amount.