A reverse mortgage is a home loan
available to homeowners aged 62 and older
that allows them to convert
part of their home equity into available cash.
The product was designed to facilitate homeownership for older homeowners by allowing them to leverage the accumulated savings in their home – borrow against it – without incurring an additional monthly mortgage expense as they would with a traditional mortgage or line of credit.
The borrower is not required to make principal or interest payments on the loan until the borrower departs the home, typically by moving, selling or when they pass. The non-recourse feature of the reverse mortgage means the borrower can never owe more than the value of the home at the time the loan is repaid. The loan can also become due if the borrower does not comply with all of the mortgage loan terms.
As long as the borrower lives in the home they are not required to make any monthly principal or interest payments, regardless of the outstanding balance or home value. It is very important to remember that the homeowner is still responsible for paying property taxes and homeowners insurance and maintaining the home as a requirement of the reverse mortgage.
*There are some circumstances that will cause the loan to mature and the balance to become due and payable. Borrower is still responsible for paying property taxes and insurance and maintaining the home. Credit subject to age, property and some limited debt qualifications. Program rates, fees, terms and conditions are not available in all states and subject to change.