A reverse mortgage is a loan option that allows homeowners who are 62 and older to convert some of their home equity into tax-free cash.
- You still own your home and live in it.
- There are no monthly mortgage payments.
- Most reverse mortgages are government-insured.
Instead of paying all cash or taking out a traditional mortgage, buyers use a reverse mortgage to finance part of the purchase price. This significantly reduces the amount of out-of-pocket funds buyers must bring to the table.
- Buyers can save and invest more of their proceeds from the sale of their current homes.
- At closing they only bring the difference between the reverse mortgage proceeds and the sale price.
- There are no monthly mortgage payments, and the loan does not need to be repaid unless:
- The borrower sells the home.
- The home is no longer the primary residence of at least one of the borrowers.
- The borrower does not meet loan obligations, such as taxes, insurance or property maintenance.