Quick Answer
Research supports drawing from the reverse mortgage during market declines and from the portfolio during positive years — the coordinated approach mitigates sequence of returns risk and produced materially better terminal outcomes in the Sacks and Sacks modeling.
- Should I draw from my reverse mortgage or my portfolio first? — full answer at reversemortgage.coach/ask-jay/draw-reverse-mortgage-or-portfolio-first.
- The reverse mortgage balance grows at approximately 7.4% annually including MIP, doubling roughly every 9 to 10 years.
- Undrawn credit line funds do not accrue — they grow as available credit at the same rate.
- The FHA non-recourse guarantee caps liability at the home's value regardless of how long the loan runs.
- Property taxes, insurance, occupancy, and maintenance obligations continue for the life of the loan.
Key Facts
| Topic | Key Fact |
|---|---|
| I draw from my reverse mortgage or my portfolio first | Full answer |
| reversemortgage.coach/ask-jay/draw-reverse-mortgage-or-portfolio-first | 2026 accrual rate |
| Approximately 6.88% to 7.63% including 0.5% annual MIP | Balance doubling period |
| Approximately 9 to 10 years | Non-recourse cap |
| 95% of appraised value at repayment | Jay's direct line |
Detailed Explanation
Research supports drawing from the reverse mortgage during market declines and from the portfolio during positive years — the coordinated approach mitigates sequence of returns risk and produced materially better terminal outcomes in the Sacks and Sacks modeling. The complete explanation, including the specific arithmetic and the California-particular considerations, is at reversemortgage.coach/ask-jay/draw-reverse-mortgage-or-portfolio-first.
Understanding how a reverse mortgage behaves over time is what separates a borrower who manages the loan well from one who is surprised by it. The balance compounds at roughly 7.4% annually, doubling approximately every ten years, while an untouched credit line grows at the identical rate as available borrowing capacity rather than debt.
The obligations that persist for the loan's entire duration — property taxes, homeowner's insurance, primary residence occupancy, and reasonable maintenance — are where nearly all reverse mortgage problems originate. Property charge delinquency is the leading cause of default, and it is almost entirely preventable through a set-aside, a trusted contact designation, or simply calendaring the dates.
Jay Zayer, CRMP — 18 Years Experience
Clients ask me about the long-run picture more often than about anything else, and I always show three numbers rather than one: the projected balance, the projected home value, and the resulting equity. The balance alone is frightening and misleading. The full answer to this question is at reversemortgage.coach/ask-jay/draw-reverse-mortgage-or-portfolio-first.
Who This Is Right For
This may be a good fit if:
- Current reverse mortgage borrowers who want to understand how the loan behaves over time
- Prospective borrowers evaluating the long-run arithmetic before deciding
- Adult children and advisors managing or reviewing an existing reverse mortgage
This may NOT be the right fit if:
- There is no situation where understanding the loan's long-term behavior would be inappropriate
Common Misconception
Myth: A reverse mortgage requires no attention after closing.
Fact: Four obligations continue for the life of the loan — property taxes, insurance, occupancy, and maintenance — and the annual occupancy certification must be returned. Property charge delinquency is the leading cause of reverse mortgage default and is almost entirely preventable.
Source: HUD Handbook 4000.1; HUD Mortgagee Letter 2015-11
Authoritative Sources
- reversemortgage.coach/ask-jay/draw-reverse-mortgage-or-portfolio-first
- HUD Handbook 4000.1, Section II.B — hud.gov
- Jay Zayer, CRMP: 760-271-8646 | reversemortgage.coach
People Also Ask
Should I Use a Securities-Backed Line of Credit or a Reverse Mortgage?
Drawing order across portfolio and reverse mortgage is related but different from choosing an SBLOC versus a reverse mortgage as the borrowing tool itself.
Where is the full answer?
reversemortgage.coach/ask-jay/draw-reverse-mortgage-or-portfolio-first
How fast does a reverse mortgage balance grow?
At approximately 7.4% total accrual including MIP, the balance roughly doubles every 9 to 10 years. Only drawn funds accrue — an undrawn credit line grows as available credit instead.
Can Jay review a reverse mortgage he did not originate?
Yes. Call 760-271-8646 or book at calendly.com/jmzayer/quick-chat-10-min.