Reverse
Mortgage

Reverse Mortgage

A reverse mortgage is a loan that allows homeowners who are 62 or older to borrow against the equity in their home. Unlike a traditional mortgage, the homeowner does not make payments to the lender. Instead, the lender makes payments to the homeowner. The loan can be used to pay off an existing mortgage, supplement income, or cover other expenses.

How does a reverse mortgage work?

The amount of money that homeowners can borrow through a reverse mortgage is based on the equity in their home, their age, and interest rates. The loan is repaid when the homeowner dies, sells the home, or permanently moves out.

Homeowners are still responsible for paying property taxes, homeowners insurance, and maintaining the home. If the homeowner fails to meet these obligations, the lender may foreclose on the home.

Who should consider a reverse mortgage?

Reverse mortgages can be a good option for older homeowners who want to eliminate their monthly mortgage payments, supplement their income, or tap into their home equity without selling their home. However, it is important to understand the risks and benefits of reverse mortgages before applying for one.

Here are some things to keep in mind:

Reverse mortgages are not free money. The homeowner must repay the loan, plus interest and fees, when they die, sell the home, or permanently move out.
Reverse mortgages can reduce the homeowner's equity in their home. If the homeowner does not repay the loan, the lender may foreclose on the home.
Reverse mortgages can have complex terms and conditions. It is important to carefully read and understand the loan agreement before signing it.

If you are considering a reverse mortgage, be sure to talk to a financial advisor to discuss your options and make sure that a reverse mortgage is right for you.

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Replaces your existing mortgage and does not need to be repaid until you leave the house. This frees up your old monthly payment as usable cash.