A reverse mortgage is a loan that allows you to take money from your home equity without having to sell.
Similar to a traditional home equity lone or line of credit, you may be able to borrow up to a certain percentage of the current value of your home. The maximum amount you will be able to borrow will depend on your age, your home’s appraised value, as well as your lender. A reverse mortgage has one very important difference from a traditional home equity loan:
You don’t need to make any payments on a reverse mortgage until the loan is due.
This is usually when you move out of your home, sell it or the last borrower passes away. You will owe more interest on a reverse mortgage the longer you go without making payments, and this may result in you having less equity in your home. However, a reverse mortgage can help you manage your expenses into retirement and maintain the standard of living to which you have become accustomed.
To be eligible for a reverse mortgage, you must be:
at least 55 years old
Pursuing a reverse mortgage on your primary residence
You can use the money you get from a reverse mortgage to pay any mortgage, debt or lien against your house.