What exactly is a reverse mortgage? Is a reverse mortgage the right option for you? A reverse mortgage may not be for everyone, but here's what you need to know.
A reverse mortgage is a loan available to homeowners, 62 years or older, that allows them to convert part of the equity in their homes into cash. The loan is called a reverse mortgage because instead of making monthly payments to a lender, as with a traditional mortgage, the lender makes payments to the borrower.
According to HECM, borrower requirements for purchase to get a reverse mortgage are:
- The borrower must have no delinquent federal debt
- The borrower must be able to pay the home's property taxes, insurance premiums, homeowners association dues and any other ongoing property costs
- The home must be the borrower's primary residence
- Borrowers must own the property outright or have a considerable amount of equity in it
- The minimum age is 62 years old