Reverse mortgage definition & considerations

by Celina Vazquez 08/13/2023

older couple sitting in their living room with agent discussing finances

When searching for funding in the real estate world, it’s crucial to understand each loan type and its definition. Reverse mortgage is one important term you may encounter when thinking about building equity in your home. But what does reverse mortgage mean?

What is a reverse mortgage?

A reverse mortgage refers to a loan type available to homeowners aged 62 or older, and permits them to turn their home equity into income without monthly mortgage payments. A reverse mortgage loan essentially lets you borrow money, nearly uninhibited, against the equity you’ve already invested in your home.

What is a home equity conversion mortgage or “HECM?”

There are several types of reverse mortgages to choose from, depending on a variety of factors. The most common form of reverse mortgage is the HECM. 

An HECM is also sometimes called a Federal Housing Administration (FHA) reverse mortgage, and is only available to those who meet FHA qualification requirements.

When to consider a reverse mortgage

To those who qualify, there can be definite advantages to a reverse mortgage. Reverse mortgage loans allow many homeowners the flexibility to supplement their income later in life and benefit from their investment in their homes. They can also be helpful in situations where significant costs, such as healthcare, necessitate a lump sum payment.

However, reverse mortgages don’t make sense for everyone. It’s best to find a trustworthy lender or loan program before considering this type of loan, and discuss your options with a trusted financial advisor. 

About the Author

Celina Vazquez

Southern California Realtor with over 16 Years of Experience

Celina Vazquez

My name is Celina Vazquez and I'd love to assist you. Whether you're in the research phase at the beginning of your real estate search or you know exactly what you're looking for, you'll benefit from having a real estate professional by your side. I'd be honored to put my real estate experience to work for you.

I have experience serving clients all over Southern California in both real estate and property management. With over 16 years of experience, I can guide you from start to finish whether it be your first home or your investment.

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