Reverse Mortgage

Reverse Mortgage

A reverse mortgage is a loan that allows homeowners 62 years of age and older to tap into the equity in their home without having to make monthly mortgage payments. The loan is repaid when the homeowner sells the home, moves out permanently, or dies.

There are two main types of reverse mortgages:

• HECM (Home Equity Conversion Mortgage): This is the most common type of reverse mortgage. It is insured by the Federal Housing Administration (FHA) and is available to homeowners with a low debt-to-income ratio.

• Non-HECM: This type of reverse mortgage is not insured by the FHA and is available to homeowners with a higher debt-to-income ratio.
Reverse mortgages can be a good option for homeowners who need extra cash to supplement their income, pay for home repairs, or make other major purchases. However, it is important to understand that reverse mortgages are not without risk. The loan must be repaid when the homeowner sells the home, moves out permanently, or dies. If the homeowner does not repay the loan, the lender can foreclose on the home.

If you are considering a reverse mortgage, it is important to talk to a financial advisor to understand the risks and benefits of this type of loan.