A reverse mortgage is a mortgage program for homeowners age 62 and older to convert the equity in their home into a lump sum cash disbursement, a line of credit, monthly payments or a combination of these. A reverse mortgage works as the name implies, you do not make payments to the lender. Instead payments are made to you from the lender!
A reverse mortgage is not due to be paid until the last borrower leaves the home, no matter how long that takes. Heirs are not responsible for the loan beyond what the home is worth should that situation arise. The lender does not take title to your home when you pass away, but your heirs must pay off the loan typically within twelve months. At that time the reverse mortgage debt can be repaid by refinancing the loan into a forward mortgage or by the sale of your home. You or your heirs do not have to give up the home, there are options. Reverse mortgage proceeds can pay off existing mortgages and liens.
*These materials are not from HUD or FHA and were not approved by HUD or a government agency.