A Reverse Mortgage is a financial product available to homeowners typically aged 62 or older, designed to allow them to convert a portion of their home equity into cash without having to sell their home or make monthly mortgage payments. Instead of the homeowner making payments to the lender, the lender makes payments to the homeowner, either in a lump sum, a series of payments, or a line of credit. The loan is repaid when the borrower sells the home, moves out permanently, or passes away. Reverse mortgages can provide retirees with additional income in retirement, but they also come with risks and considerations, such as potentially reducing the inheritance for heirs and accruing interest over time. Therefore, it’s crucial for homeowners to thoroughly understand the terms and implications of a reverse mortgage before entering into one.
