What is a reverse mortgage?
A reverse mortgage is a special type of loan that allows older homeowners to borrow against the equity (wealth) in their homes.
Here’s how a reverse mortgage works:
It is called a “reverse” mortgage because, instead of making payments to the lender, you receive money from the lender. The money you receive, and the interest charged on the loan, increase the balance of your loan each month. Over time, the loan amount grows. Since equity is the value of your home minus any loans, you have less and less equity in your home as your loan balance increases. Not everyone is eligible.
To qualify for a reverse mortgage:
- You must be at least 62 years old.
- Your home must be your primary residence.
- You must have paid off some, or all, of your traditional mortgage.
Read more about reverse mortgage eligibility here.