What is a Reverse Mortgage?

A reverse mortgage is a financial product specifically designed for homeowners aged 62 and older. It allows them to convert a portion of their home equity into tax-free* cash without the need to sell their home, give up title, or make monthly mortgage payments. Instead, the loan balance increases over time as interest accrues on the amount borrowed.

The loan is typically repaid when the homeowner passes away, sells the home, or no longer resides in the property as their primary residence. Reverse mortgages are regulated by the Federal Housing Administration (FHA) and are insured by the government to protect both the borrower and the lender. With the flexibility to receive loan proceeds as a lump sum payment, monthly installments, or a line of credit, a reverse mortgage can provide financial assistance and flexibility for homeowners in retirement.

(*Please consult with a tax advisor regarding the specific tax implications of a reverse mortgage.)