Definition
A reverse mortgage is a loan for older homeowners that allows them to borrow against their home’s equity. The lender pays the homeowner, increasing the loan balance, and the loan is repaid when the homeowner sells the home or passes away.
Understanding Reverse Mortgages
Reverse mortgages often come into play for homeowners aged 62 or older looking to tap into their home equity. In simple terms, a reverse mortgage allows them to convert part of their home's value into cash without selling it. Example: If your home is worth $300,000, you might access $100,000 depending on age and equity. It's important to know that a reverse mortgage doesn't mean you give up ownership of your home. A common misconception is that the bank takes your house; in fact, you remain the homeowner, and the loan is repaid when the home is sold or the owner moves out or passes away.
