A reverse mortgage is a type of loan that enables homeowners over the age of 62 to borrow against the equity in their homes. What makes them distinct from other types of loans is that the homeowner never has to make any payments although they have the option to make payments if they choose. The loan is repaid in full only when the homeowner passes away, sells their home, or moves.

Reverse mortgages are negative amortization loans. When it’s time to repay the loan, both the principal amount borrowed and all accumulated interest must be paid back. These loans only need to be repaid when both borrowers are no longer using the home as their primary residence.

Homeowners can receive their loan as a lump sum, in monthly installment payments, or as a line of credit, or a combination of these.

Reverse mortgage borrowers may use the proceeds however they wish. Some examples include: pay off a mortgage, pay off credit cards, pay off home equity loans, make home repairs, pay property taxes, stop foreclosure, travel, or purchase a home.

That will depend on your age, the interest rates, and your home’s value. Older borrowers generally qualify for more funds.

You can take your funds as a lump sum, a line of credit, or as monthly payments. You can also use a combination of these options.

The loan becomes due when the home is no longer the borrowers principal residence. This happens when the borrowers die, the home is sold, or the borrowers live in a nursing home for 12 months or more.

After the borrowers have passed, the heirs have multiple options. They may choose to sell the home, refinance the home, pay off the home, or walk away through the use of a deed-in-lieu of foreclosure. If the heirs decide to sell or refinance, the reverse mortgage is paid off at closing and any remaining equity becomes their inheritance. If you owe more than your home is worth but sell your home for the appraised fair market value, the remaining balance will be paid by mortgage insurance.

Neither borrowers nor their heirs can ever be financially responsible for any payments should the amount of the loan ever exceed to value of the house or sales proceeds when sold

• Borrowers will need to maintain the home as their primary residence
• All property taxes, homeowners insurance and HOA dues need to be paid by the borrower and must be current
• The home needs to be maintained in good order as per FHA requirements

No. A reverse mortgage allows homeowners to retain the title and ownership of their home for as long as they live in the home and the loan remains in good standing. Like other loans, this requires the borrower to keep up with property taxes, insurance and maintenance.