How Does It Work?

How does a reverse work

A reverse mortgage, like a traditional mortgage, is a loan made by a lender to a homeowner using the home as security or collateral.

With a traditional mortgage, the homeowner uses their income to pay down the debt over time. However, with a reverse mortgage the loan balance grows over time because the homeowner is not making monthly mortgage payments.

A reverse mortgage loan typically does not require repayment until the last homeowner has passed away or has moved out of the property. Consequently, life expectancy is a huge part of the calculation in regards to how much money the borrower will receive. In general, the older you are, the more equity you have in your home and the lower your mortgage loan balance; the more money you can expect from a reverse mortgage loan.

Homeowners are responsible to pay property taxes, homeowners insurance and when applicable, flood insurance and HOA dues.  This information was not produced by HUD or FHA and the information was not reviewed or approved by the Department or Government Agency. The information is of a general nature only and does not take into account your individual objectives, financial situation or needs.  It is not intended in any way as financial, tax or legal advice.  Consult a professional tax adviser.

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The Mortgage Lady


Alisha Baty | Loan Officer
NMLS# 495465



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