What is a reverse mortgage?

A reverse mortgage is specifically designed for seniors, allowing them to convert a portion of their home equity into cash. This financial product provides homeowners who are typically age 62 or older with a way to access the value they have built up in their homes without requiring them to sell or move. Instead of making monthly mortgage payments, the loan amount is repaid when the homeowner sells the home, moves out, or passes away. This can be a crucial financial strategy for retirees needing extra income to cover living expenses.

The other choices do not accurately describe a reverse mortgage. A reverse mortgage is not associated with first-time homebuyers, which would imply a standard mortgage intended for purchasing property. Similarly, it is not a loan for investment properties or one that specifically requires impeccable credit scores; rather, eligibility is often based on the equity in the home and the age of the borrower.