What Is A Reverse Mortgage?

A reverse mortgage is a special kind of loan which is used to convert the equity in a home into a liquid asset like cash. Reverse mortgage is generally given to senior citizens as financial security in their retirement period.  The mortgage is titled as 'reverse' because contrary to conventional mortgage, the payment method is reversed.  

Instead of the borrower making monthly payments to the lender against the equity of the home, in case of reverse mortgage, the lender makes the payments to the borrower. The benefit of reverse mortgage is the borrower retains ownership of the home and holds its title without having to make monthly payments. People who are eligible for reverse mortgage must be a minimum of 62 years in age and must occupy the home as their main residence. The income is not a parameter in qualifying a person for reverse mortgage. Also reverse mortgages do not have to be paid back, until the borrower sells the home, relocates himself or dies.