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Reverse Mortgages: The Basics

Many Americans, particularly seniors, have heard about reverse mortgages. Here are the basics:

WHAT IS IT? First and foremost, a reverse mortgage is a loan. It enables borrowers (homeowners age 62 and older) to receive income by accessing equity in their home.

HOW IS IT DIFFERENT FROM TRADITIONAL MORTGAGES? In traditional mortgages, a borrower makes monthly payments to the lender. In a reverse mortgage, the borrower receives monthly payments from the lender. Typically, no payments from the borrower are due for as long as they remain in the home.

IS IT RISKY? As with all loan products, there are risks. Reverse mortgages should be used only as a last resort. But for some seniors with no other resources, this may be a viable option. Some reverse mortgages have variable interest rates, which change over the life of the loan, causing additional risk. They can also use up most or all of your equity, leaving fewer assets to you or your heirs.

WHERE CAN I FIND MORE INFORMATION? According to the Federal Trade Commission, before applying for a reverse mortgage, you must be counseled by “an independent government-approved counseling agency.” For more information on reverse mortgages, go online to, search “Reverse Mortgages: Get the Facts” to locate the link, or visit and search “reverse mortgages” to locate links to several stories.

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