Top mistakes: taking a lump sum when a growing line of credit fits better; not budgeting for taxes and insurance; leaving a younger spouse off the loan incorrectly; and not comparing HECM vs. proprietary options.
Structural mistakes
The biggest error is choosing the wrong payout. Taking a fixed-rate lump sum when you don’t need all the cash means paying interest on money that just sits there — when a growing line of credit would have given more flexibility and reserve. We model the options first.
Obligation and spousal mistakes
Two costly oversights: not budgeting for ongoing property taxes and insurance (which can trigger default), and mishandling a younger spouse. Setting up an eligible non-borrowing spouse correctly protects their right to remain in the home. Skipping the proprietary comparison can also leave money on the table for higher-value homes.
Frequently asked questions
What happens if I don’t pay property taxes?
It can put the loan in default and, ultimately, risk the home. A LESA set-aside can pay these automatically to prevent that.
Should I take the lump sum?
Only if you have a specific use for all of it. Otherwise a growing line of credit usually gives more long-term value and flexibility.
How do I protect my younger spouse?
List them as an eligible non-borrowing spouse where applicable. We make sure the paperwork is done right so they can stay in the home.
Save Financial is a California-licensed mortgage brokerage (NMLS #377740, DRE #01875766). Figures are illustrative for 2026 and not an offer of credit.