There are lots of misconceptions about reverse mortgages, particularly among senior homeowners. A reverse mortgage can help senior homeowners who are equity rich – but need the liquidity of additional cash flow - to help fund their retirement. A Reverse mortgage operates much like any other loan secured by a home… except that it transfers responsibility for repayment from the borrower to the home at sale or refinancing. It allows a senior homeowner to eliminate their mandatory, monthly Principal and Interest mortgage payments, while unlocking access to the equity in their home, free of income taxes.
By using a reverse mortgage, a senior homeowner can remain in their home, retaining their title as owner and still maintain their independence. This additional non-taxable cash flow can also help senior homeowners decrease the odds of outliving their money in retirement and reduce the anxiety about their financial future.