
When you’re thinking about how to support your finances during retirement, it’s natural to explore a few different options. Some people look into downsizing, while others consider renting out part of their home. Yet, one solution that continues to gain attention is a reverse mortgage. This approach allows homeowners to turn part of their home equity into usable funds without having to move. That said, understanding how it works is key before making any decisions.
What Makes a Reverse Mortgage Different?
To begin with, a reverse mortgage works in the opposite way of a traditional home loan. Instead of paying the lender each month, the lender actually pays you. As time goes on, the amount you owe increases. However, you’re not expected to make monthly payments. Rather, the balance becomes due when you no longer live in the home or when the property is sold.
This arrangement gives many retirees more freedom. Since no monthly repayment is required, the funds can be used as needed. On top of that, you still keep the title to your home.
Read More Should You Consider a Reverse Mortgage? Everything You Need to Know