A reverse mortgage is a loan that allows senior homeowners (62 years or older) to convert the equity in their homes into tax-free income without having to sell or make new or larger monthly payments. The reverse mortgage got its name because the payment stream is “reversed”, so rather than making payments towards a loan, payments are made to the borrower from the lender. Unlike a traditional home equity loan, no repayment is due on the reverse mortgage until the borrower no longer uses the home as a primary residence.

Reverse mortgages give seniors who are no longer able to work or generate income a way to leverage the equity in their house to start receiving a monthly income once again. The payments received from the reverse mortgage can be used to pay medical bills, credit card debt, or any other expenses that may be necessary.

Qualifications & Requirements of a Reverse Mortgage

You must be 62 years or older, and the home that the reverse mortgage is being taken against must be your primary residence.

How much money can I get from a Reverse Mortgage?

The reverse mortgage amount will depend on your age, interest rate, and the value of your home. Typically, the more valuable your home is and the older you are, the more money you will be able to borrow with your reverse mortgage. A lower interest rate will also affect the amount of money that you can borrow.

How will I receive the money from a Reverse Mortgage?

You will generally have three different options when choosing to receive money from a reverse mortgage. All of the amounts will be determined by the above criteria.

1. Monthly payments
2. Lump sum
3. Line of credit