It is called a reverse mortgage because rather than the homeowner making monthly payments to a lender, the lender makes monthly payments to the homeowner.
The reverse mortgage process includes important consumer protections, such as a requirement that the borrower talk with an independent third-party loan counselor before securing the mortgage. This helps ensure that borrowers understand the program and have reviewed alternative options.
Key elements of reverse mortgages:
- They enable homeowners to access home equity without making monthly payments
- No income or medical requirements
- Borrower’s name stays on the title of the house
- Money can be received all at once, in fixed monthly payments or as a line of credit
- Loan income has no impact on regular Social Security or Medicare benefits