A reverse mortgage is a type of specialty mortgage product also known as a home equity conversion mortgage. It’s offered to homeowners who meet certain qualifications: You must be a minimum age of at least 62 years old (in most cases) and have some equity in your home. A reverse mortgage is essentially a loan that doesn’t require any immediate payments. Instead, you can pay off as much or as little as you want. The loan typically becomes due when the borrower dies, permanently moves out of the home, or sells the home.
Federal guidelines do not allow the loan balance to exceed the home’s value, which ensures that the borrower’s heirs won’t get stuck with additional debt. Keep in mind that upfront costs are usually involved and although most reverse mortgages are federally insured, scams that try to prey on seniors do exist. It’s important to thoroughly research the lender and read your contract. Continue reading to see which reverse mortgage company might be a good fit for you.