What Is a Reverse Mortgage Loan?

Reverse mortgages let homeowners tap in to the value of their homes and receive money from their lenders. The money can be withdrawn in a single lump sum, received in monthly payments, or take the form of a line of credit, depending on the arrangements made in the reverse mortgage agreement.

You must meet several conditions before you can qualify for a reverse mortgage. You must be 62 or older and own your own home, condominium, or townhouse, and live in it as your primary residence. Co-op owners typically will not qualify for a reverse mortgage. Most lenders also require that there be no other debt against the home. If you still owe some debt on your home, you can arrange to pay it off with some of their reverse mortgage payments.

The amount of the reverse mortgage is based on the value of the home, so your credit history is not a significant factor. The age of the borrower, interest rate, and loan fees will also factor into the amount of the reverse mortgage.