A reverse mortgage is a specific type of loan taken out against your home that subsequently allows you to convert a specific percentage of your equity into tax-free money without the additional burden of monthly loan payments. They are ideal for people who do not plan on moving, who cannot afford day-to-day maintenance costs, or want to use their home equity to pay an incurred cost or create a financial reserve just in case they need it.

One of the advantages of a reverse mortgage is that nothing is due until the owner permanently moves, sells their home, or passes away. However, they are still required to pay both property taxes and homeowner’s insurance. Also, an important fact to keep in mind is that reducing the equity in your home ultimately lessens the overall value of your estate, meaning you will have less to leave behind to your heirs. For this reason, it may be beneficial to check into alternate sources of income prior to taking out a reverse mortgage.

Reverse mortgages were conceived to help homeowners much like yourself by allowing them to access their equity in order to optimize their golden years. They received their name due to the fact that under the terms therein the lender pays the borrower in accordance with a specific percentage of the home equity, rather than the borrower paying the lender (as would be the case under normal circumstances).

Remember, as the borrower, you are not required to pay the loan back unless your home is vacated or sold. Even better, as long as you reside in the home you will not have to make monthly payments on the loan balance.