Reverse mortgages differ from home equity loans in that most reverse mortgages do not require any repayment of principal, interest, or servicing fees as long as you live in the home. The reverse mortgage s benefit is that it allows homeowners who are age 62 and over to keep living in their homes and to use their equity for whatever purpose they choose. A reverse mortgage might be used to cover the cost of home health care, to pay off an existing mortgage to stop a foreclosure, or to support children or grandchildren. But willing lenders may still be scarce in some places. When the homeowner dies or moves out, the loan is paid off by a sale of the property.
Any leftover equity belongs to the homeowner or the heirs.
To qualify for a reverse mortgage, you must own your home. The amount you are eligible to borrow generally is based on your age, the equity in your home, and the interest rate the lender is charging. Because you keep the title to your home, you are responsible for taxes, repairs, and maintenance. Depending on the reverse-mortgage plan you choose, your reverse mortgage becomes due, with interest, when you move, sell your home, die, or reach the end of the selected loan term. The lender does not take title to your home when you die, but your heirs must pay off the loan.