A reverse mortgage is a loan that allows qualified homeowners who are age 62 or older to take part of their home’s equity as cash, either as a line of credit, or monthly or lump sum payment, or combo of a credit line and payments. But, unlike a standard mortgage loan, it requires no repayment until the borrower no longer occupies the residence. Borrowers with reverse mortgages are still required to pay the real estate taxes, homeowners insurance, flood insurance, and association dues.
With careful planning, reverse mortgages can be used as a way to supplement other retirement income. Reverse mortgages also can be used to purchase a home if you are able to come up with the difference in cash from the proceeds of the reverse mortgage loan and the purchase price of the property.