The truth about reverse mortgages—2025 edition.
A reverse mortgage is a type of loan available to homeowners aged 62 or older that allows them to convert part of the equity in their home into cash, without having to sell the home or make monthly mortgage payments.
How It Works:
1. Eligibility:
- Must be at least 62 years old (other options are available for 55+).
- The home must be your primary residence.
2. Loan Structure:
- You can receive the money as a lump sum, monthly payments, a line of credit, or a combination.
3. Repayment:
- You don’t have to repay the loan as long as you live in the home and meet loan obligations (like paying property taxes, insurance, and maintenance).
- The loan becomes due when you sell the home, move out permanently, or pass away.
- The home can be sold or refinanced to repay the loan. Any leftover equity goes to you or your heirs.
4. Loan Limit:
- The amount you can borrow depends on your age, the home’s value, current interest rates, and the type of reverse mortgage.
5. Most Common Type:
- The most common reverse mortgage is the Home Equity Conversion Mortgage (HECM), insured by the Federal Housing Administration (FHA).
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