Reverse Mortgages Explained

A reverse mortgage lets homeowners 62+ turn equity into tax-free cash with no monthly payment — powerful, but not for everyone. Here's the full picture.

How it works

Instead of you paying the lender, the lender pays you — as a lump sum, line of credit or monthly draw. The balance grows over time and is repaid when you sell, move out or pass away. Estimate your proceeds in the reverse mortgage calculator.

The pros

• No monthly mortgage payment.
• Tax-free cash you can use for any purpose.
• It's non-recourse — you or your heirs never owe more than the home's value.
• You keep the title and stay in your home.

The cons

• The balance compounds — see how fast in the balance calculator.
• Upfront fees and mortgage insurance are significant.
• It reduces the equity you leave to heirs.
• You must keep paying taxes, insurance and upkeep.

Reverse mortgage vs HELOC

If you can make monthly payments, a HELOC is usually cheaper and preserves equity. A reverse mortgage exists for those who can't or won't make payments. Compare in the vs HELOC tool, and check your equity first with the home equity calculator.