What is Reverse Mortgage (HECM)?
A reverse mortgage lets homeowners — generally age 62 or older — convert part of their home equity into cash without selling or making monthly mortgage payments. Instead of paying the lender, the homeowner receives payments, and the balance grows over time. The loan is repaid when the owner sells, moves out permanently, or passes away. The most common type is the federally insured Home Equity Conversion Mortgage (HECM), and the owner remains responsible for taxes, insurance, and upkeep.
Example: A 70-year-old with a paid-off home takes a reverse mortgage for monthly payments that supplement retirement income; the loan plus interest is repaid from the sale of the home later.