What Is a Reverse Mortgage?

A reverse mortgage is where the borrower doesn’t make monthly payments to the lender. Instead, the lender makes payments to the borrower, and the loan balance increases over time. The borrower is not required to repay the loan until the home is sold or the borrower dies. At that time, the lender is repaid from the proceeds of the sale or from the borrower’s estate.

Reverse mortgages can be helpful for seniors ages 62 and up who wish to stay in their homes but do not have the income to make monthly mortgage payments.

Pros

• You don't have to make monthly payments while you reside in the home. 
• You don't need to have good credit or an income to qualify for the loan and make monthly mortgage payments
• The money you get from selling your house can be used for living and healthcare expenses, debt repayment, and other bills.

Cons

• There are age, equity, and fee requirements to qualify for the loan.
• The borrower must maintain the home, pay for homeowner insurance, taxes, and more. If not, the borrower risks violating the terms of the agreement and could lose their home. 
• If the value of the home decreases, the borrower may end up owing more money than their home is worth.

is a reverse mortgage right for me?

A reverse mortgage may be a good option for some seniors who want to stay in their homes but need additional income and don’t want to make monthly mortgage payments. However, it’s not the right solution for everyone.

Because reverse mortgages come with specific eligibility requirements, ongoing responsibilities, and long-term implications, it’s important to fully understand how they work before moving forward. Anyone considering a reverse mortgage should speak with a qualified lender or financial professional to determine whether it aligns with their financial goals and circumstances.