Reverse Mortgages are loans designed for seniors 62 years or older. This allows them to convert part of the equity in their homes into cash. Instead of making monthly payments to a lender, as with as a traditional mortgage, the lender makes payments to the borrower.
Reverse Mortgages are able to give family members the ability to retain financial independence by accessing the wealth that they have in their homes while allowing them to live comfortably in their own homes on their own terms.
Unlike conventional mortgages, reverse mortgages have no monthly principal and interest payments required.
The product was conceived as a means to help retirees with limited income use the accumulated wealth in their homes to cover basic monthly living expenses and pay for health care.
The mortgage is repaid once the borrower sells the home, permanently moves out or dies. Seniors aged 62 or older who own homes are eligible for a reverse mortgage.
Types of Reverse Mortgages:
- FHA-Insured Mortgage: A Home Equity Conversation Mortgage (HECM) product.
- Lender or privately-insured mortgages: These are known as “Proprietary” products, but such products are not available.
- Uninsured mortgage products offered by a financial institution or a licensed lender.