What is a reverse mortgage?

A reverse mortgage is a type of loan specifically designed for homeowners who are typically retired or elderly, allowing them to access the equity in their home without having to make monthly mortgage payments. Instead of the borrower making payments to the lender, the lender makes payments to the borrower based on the equity accumulated in the home. This can be particularly beneficial for individuals who may have limited income but want to stay in their homes while utilizing their built-up equity to cover living expenses or other costs.

This option accurately describes the unique nature of reverse mortgages, highlighting that they convert home equity into cash flow for the borrower, rather than requiring traditional loan payments. This approach allows seniors to maintain their lifestyle while leveraging the asset they've built over time, often deferring the repayment of the loan until they either sell the home, move out, or pass away.