Reverse Mortgage FAQs
What is a reverse mortgage?
A reverse mortgage is a loan product that allows homeowners 62 years of age and older to use
their equity to generate tax-free income, without having to sell the home or take on a new
mortgage payment. In fact the reverse mortgage is exactly what the title states, the reverse of a
How is a reverse mortgage different from a standard mortgage?
With a standard mortgage, the borrower (or homeowner) makes monthly payments to the lender
(or bank or mortgage company), in order to pay back the loan that the lender originally lent to for
the purchase or refinance of the house. This payment includes interest that the lender charges the
borrower for the loan. In a reverse mortgage, the situation is reversed; the lender makes monthly
payments to the borrower. However, in both a standard and reverse mortgage, the lender secures
their loan amount by using the house as collateral.
Do I make monthly payments on a reverse mortgage?
No monthly payments are due on the loan and the loan is repaid when the moves or sells the
home, passes away, or ownership otherwise changes hands
What factors determine the amount of the reverse mortgage?
There are a few factors that determine how much money a borrower will receive from a reverse
mortgage, such as the value of the home, borrower’s (and co-borrower’s) age, current interest
rates and any lending limits that may be standard for your geographic area. As a rule of thumb,
the older the borrower and the more valuable the home, the larger the available loan amount.
What can we use a reverse mortgage for?
The proceeds from the reverse mortgage can be used for anything, completely at the discretion of
the borrower, though most borrowers use the funds for home repairs or modifications, health care
expenses, to settle other debts, or for their long-planned vacation! Reverse mortgages are
available for nearly all property types with the exception of co-ops, though co-op owners in some