Reverse Mortgages

Simply put, reverse mortgages allow individuals that are at least 62 years old to borrow money against the equity in their home. Funds can be provided to the borrower in many ways, with a single lump sum, monthly payments, or access to a line of credit being the most common funding options. These loans are different from home equity loans in both how someone qualifies, how they’re funded, and how they’re required to be repaid.

To qualify for a reverse mortgage, a borrower must live in the home they’re borrowing against as their primary residence and must continue maintaining it properly. Reverse mortgages often stipulate that no payments are required to be made on the loan until the borrower no longer lives in the home they’ve borrowed against. For those individuals heading into retirement with little cash reserves but a large amount of equity in their home, this can be a great option for financing regular cost of living, planned and unexpected medical expenses, costs of care for a spouse, partner or children, large purchases and other needs.

Reverse mortgages, indicated by their age and housing requirements, are primarily designed for those heading into retirement or those that are already out of the workforce. They are also a great financial resource for individuals that may not have worked at all, have no retirement savings or income, and no longer have an income-earning partner to provide for regular cost of living as they age.

Borrowers who have established considerable equity in their home can borrow against that equity and make no payments while they reside in their home, rather than taking on the financial burden of making payments on a home equity line of credit (HELOC) or other loan source. This can greatly ease financial hardship when medical expenses, home repairs, and other high cost events arise.