A reverse mortgage is a loan that enables homeowners 62 or older to borrow against the equity in their home, without having to sell their home, give up title, or take on a new monthly mortgage payment. The borrower will never, under any circumstances resulting from the reverse mortgage, be forced to leave their home providing they make their real estate property tax and insurance payments.

The loan proceeds can be used for any purpose, and the loan isn’t repaid until the borrower moves out of the home permanently. When the loan is repaid, all remaining equity goes to the borrower’s heirs/estate. Or, should you choose to move and sell the home, you keep the remaining equity. Loan proceeds can be taken out as a line of credit, lump sum payment, steady stream of income or a combination of these three ways.

Reverse mortgages have emerged as a significant financial security tool for senior homeowners because of the broad range of needs these loans can satisfy, such as:

• Payoff debt and get rid of their monthly credit card and mortgage payments
• Funding healthcare
• Estate planning
• Lifestyle enhancement
• Gifting
• Home repairs
• Travel

Insured by the federal government through the Federal Housing Administration, an arm of the Department of Housing and Urban Development, the Home Equity Conversion Mortgage (HECM) is the predominant reverse mortgage product in the marketplace.