Ever heard of a mortgage that instead of paying it, it pays you? That’s exactly what a Reverse Mortgage does. After years of paying your mortgage and building equity in your home, a reverse mortgage is a way to pull some of that back out. If you are the age of 55 or older, you can apply for a Reverse Mortgage. Essentially, it works the same as a regular mortgage, just in reverse. Either by a lump sum, monthly payments, or a combination of both, a lender pays you a payment in exchange for a percentage of the equity in your house. That money you pull out can be used for anything from just helping your pension keep you at a nice retirement standard of living to taking the grandchildren on a vacation to Mexico.
The principle mortgage and accumulated interest on the Reverse Mortgage is not required to be paid until the borrower passes away or the home is sold. However, if you choose to do so, you are able to make monthly payments to begin repaying the loan earlier.