Define: Reverse Mortgage

A reverse mortgage is a type of loan available to homeowners aged 62 or older that allows them to convert a portion of their home equity into cash. Unlike a traditional mortgage, the borrower does not make monthly payments. Instead, the loan is repaid when the borrower sells the home, moves out, or passes away.

The amount you can borrow with a reverse mortgage depends on several factors, including your age, the value of your home, and current interest rates. Generally, the older you are and the more valuable your home, the more money you can borrow.

Yes, you still retain ownership of your home with a reverse mortgage. However, the lender will have a lien on the property, which means they have a legal claim to the home as collateral for the loan.

Yes, you can use the funds from a reverse mortgage for any purpose you choose. Whether you want to pay off existing debts, cover medical expenses, or simply supplement your retirement income, the choice is yours.

No, you will not owe more than the value of your home with a reverse mortgage. The Federal Housing Administration (FHA) insures most reverse mortgages, and they have a non-recourse feature that ensures you or your heirs will never owe more than the home’s appraised value.

You can potentially lose your home with a reverse mortgage if you fail to meet certain obligations, such as paying property taxes, homeowners insurance, or maintaining the property. However, as long as you fulfill these requirements, you can live in your home for as long as you wish.

Yes, you can sell your home if you have a reverse mortgage. The proceeds from the sale will be used to repay the loan, and any remaining funds will go to you or your heirs.

Yes, it is possible to refinance a reverse mortgage. However, the refinancing process will depend on various factors, such as the current interest rates and your eligibility for a new loan.

A reverse mortgage generally does not affect your Social Security or Medicare benefits. However, if you receive certain need-based benefits, such as Medicaid, the funds from a reverse mortgage could potentially impact your eligibility.

After the borrower passes away, the reverse mortgage becomes due and payable. The borrower’s heirs or estate will have the option to repay the loan and keep the home or sell the home to repay the loan. If the home is sold, any remaining equity after loan repayment will go to the borrower’s heirs.