A reverse mortgage is loan available to homeowners who are 62 years or older and enables them to convert part of the equity in their home into cash. You maintain the title to your property.
The reverse mortgage was created to help retirees with limited income to use the accumulated wealth in their homes, to cover basic monthly living expenses and pay for health care. However, there is no restriction on what you can use a reverse mortgage for.
The loan is called a reverse mortgage, because it works the opposite of a traditional mortgage. Instead of a borrower making monthly payments to a lender, as with a traditional mortgage, the lender makes payments to the borrower! A reverse mortgage is also known as a HECM (Home Equity Conversion Mortgage)
You are not required to pay back the loan until the home is sold or otherwise vacated. As long as you live in the home, you are not required to make any monthly payments towards the loan balance, but you must remain current on your property taxes, homeowners insurance.