Loan types

Reverse mortgage

A loan for homeowners 62 and older that converts equity into cash without monthly payments; the balance grows and is repaid when the home is sold or the owner moves.

What does reverse mortgage mean?

A reverse mortgage lets homeowners 62 and older convert equity into cash — as a lump sum, line of credit or monthly draw — without any required monthly repayment. Instead the balance grows over time as interest accrues, and the loan is repaid when the owner sells, moves out, or passes away. It can fund retirement, but the rising balance steadily eats into the equity left to heirs.

Frequently asked

How does a reverse mortgage work?

If you are 62 or older, it converts home equity into cash — a lump sum, credit line or monthly draw — with no required monthly repayment.

Interest is added to the balance instead, which grows over time and is repaid when you sell, move out, or pass away.

What are the downsides of a reverse mortgage?

The rising balance steadily reduces the equity left to your heirs, upfront costs and insurance are significant, and you must keep paying property taxes, insurance and upkeep or risk default. It is best weighed against downsizing or a HELOC.

Do you have to repay a reverse mortgage?

Not monthly, but the full balance comes due when the last borrower sells, permanently moves out, or dies. Heirs then repay it — usually by selling the home — and keep any equity that remains above the loan balance.