Reverse Mortgage A loan that turns home equity into cash for homeowners 62 and older with no required monthly payment

A reverse mortgage is a loan for homeowners age 62 or older that converts home equity into payments without requiring a monthly mortgage payment. Instead of you paying the lender, the lender pays you, and the loan balance grows over time. The balance becomes due and is repaid when the borrower sells the home, moves out, or dies. The most common type is the FHA-insured Home Equity Conversion Mortgage (HECM). Even though you skip monthly mortgage payments, you must keep paying property taxes and homeowners insurance and maintain the home, or you risk default and foreclosure. Because the balance accrues and equity shrinks, a reverse mortgage affects what you can leave to heirs. Terms, payout options, and costs vary, so it pays to compare and seek required counseling before committing.