In a reverse mortgage the lender pays the borrower, instead of the other way around. These special loans can be complicated. Research and investigation are important steps in understanding the process. Borrowers must be at least 62 years of age for most reverse mortgages, occupy the home as a principal residence and apply for them by signing loan papers. A reverse mortgage is a mortgage that pays senior citizen homeowners their equity, like a line of credit, but in reverse.
Homeowners can withdraw amounts that total against the equity in their house.
They never have to make a payment. The loan, which is based upon the amount they drew out, is paid off when their estate is settled. Until recently, senior citizens only had two options to get cash from their home. They could either sell their home and then have to move out, or they could borrow but incur regular loan payments. A reverse mortgage becomes the third option for seniors who are eligible to take out a loan they don't have to pay back as long as they live in their home.