Unlike a traditional mortgage, where homeowners make monthly payments to a lender, a reverse mortgage works the other way around—the lender pays the homeowner. It’s for those 62 and older who want to tap into their home’s equity without selling. Instead of making payments, the homeowner receives money as needed, and the loan balance grows over time. The loan doesn’t have to be repaid until the homeowner passes away, moves out, or sells the home. At that point, the balance comes due. If the homeowner has passed, their heirs have options:

• Refinance or repay the loan to keep the home.
• Sell the home, pay off the loan with proceeds, and keep any remaining funds. If the home is worth less than the loan balance, lenders often accept the sale price as full repayment, thanks to built-in protections.