Tap into your home equity without selling your home. If you are at least 62 years of age, have a zero balance in a mortgage, and maintain the property as your primary residence, a reverse mortgage might be right for you.
Tap Into Your Home Equity with a Reverse Mortgage
For homeowners who are 62 or older, you can borrow against the value of your home and receive the funds as a lump sum, fixed monthly payment, or a line of credit. With a reverse mortgage, a homeowner does not need to make any loan payments.
The way that reverse mortgages are structured, the entire loan balance becomes due when the borrower dies, moves away, or sells the home.
Federal regulations require lenders to structure the transaction so the loan amount doesn’t exceed the home’s value and the borrower or borrower’s estate won’t be held responsible for paying the difference if the loan balance does become larger than the home’s value. One way this could happen is through a drop in the home’s market value; another is if the borrower lives a long time. –Investopedia
Home equity is usable only if you sell and downsize your home or borrow against it with a home equity loan. With a reverse mortgage, retirees with limited incomes can access their home equity.
Note that most reverse mortgages are federally insured, but there are a lot of mortgage scams out there that target seniors, so be sure to talk with your mortgage lender for the right reverse mortgage for you.