What is a Reverse Mortgage?

What is a reverse mortgage? A reverse mortgage is a loan that allows older homeowners to access the equity in their homes. Instead of making a mortgage payment to reduce your debt, you receive money and increase your debt. Reverse mortgages are an option for people who want to turn substantial home equity into cash.

The Basics

You have to qualify and meet certain conditions for most reverse mortgages.

• Reverse Mortgage Eligibility

What is a reverse mortgage payout like? You can choose to receive payments using variety of options including lump-sum, periodic payments, line of credit, or a combination of options.

• Reverse Mortgage Payout Options Explained

Costs

Like all loans, reverse mortgages have costs. A major cost is the interest you pay on borrowed money, and there may be other costs as well. Most costs can be bundled with the loan so you do not pay out of pocket.

• Common Reverse Mortgage Costs

Getting a Reverse Mortgage

Now that we've covered what a reverse mortgage is, you can decide if you'd like to go further. To get a reverse mortgage, talk with a lender. For federally insured reverse mortgages you’ll have to visit with an approved counselor before closing the deal.

You can generate a list of federally insured (or HECM) lenders at the US Department of Housing and Urban Development (HUD) Website.