What is a reverse mortgage?

A reverse mortgage is a type of loan for people over the age of 62 who own their home. This type of loan allows elderly homeowners to use the equity in their home to receive cash without having to make payments on the loan. The loan is "reversed" because the homeowner does not pay back the loan until they permanently move out of the house, the house is sold, or the homeowner passes away. In Delaware, reverse mortgages are regulated by HUD’s Home Equity Conversion Mortgage program and by state law. This type of loan is available through banks, credit unions, and other financial institutions. When taking out a reverse mortgage, homeowners are required to get counseling from an approved counseling agency to ensure they understand how the loan works. Eligible homeowners are able to receive the loan in a lump sum, as a line of credit, or in monthly payments. All of the money received is considered a loan and will need to be paid back. When the loan is paid back, the homeowner or their heirs will receive whatever is left on the home after the loan is paid off. Reverse mortgages are a useful tool for providing elderly homeowners with additional funds to pay for living expenses, medical bills, or home repairs. However, they can also be a financial risk if not used responsibly, so it is important to fully understand the loan and its associated costs before taking out a reverse mortgage.

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What is a reverse mortgage?

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