A reverse mortgage is a consumer loan for senior homeowners age 62+. This type of mortgage allows senior homeowners to use all or a portion of their home equity to supplement their income or purchase a home without paying it back. Homeowners can generally receive their home equity tax-free. While there are no monthly mortgage or interest payments, the homeowner is still responsible for paying property taxes, insurance, and maintenance. Repayment of the loan is deferred until the homeowner dies, sells, or moves out of the home. The only reverse mortgage insured by the US Federal Government is called a Home Equity Conversion Mortgage (HECM) and is only available through an FHA approved lender.

This is a non-recourse loan, so neither you nor your heirs are liable for any amount of the mortgage that exceeds the value of your home.

You choose the disbursement option. There are several ways that you can receive the proceeds of the loan, such as:

A Lump sum payment – cash at closing.

Tenure – equal monthly payments as long as the homeowner lives in the home.

Term – equal monthly payments for a fixed time period.

Line of Credit – draw any amount at any time until the line of credit is exhausted.

Or you may elect any combination of any of those listed above.

 It is highly recommended that you speak with your financial advisor about your specific situation and if a reverse mortgage is the right plan for you.