What Is a Reverse Mortgage?

How Does It Work?

If you are a homeowner over the age of 62, then you may be wondering if a reverse mortgage is right for you. A reverse mortgage allows homeowners to borrow against their home equity, and there are many different ways to structure the loan. BSM advisors will discuss what a reverse mortgage is and how it works. We will also talk about the pros and cons of taking out a reverse mortgage and answer some common questions that people have about them.

The first thing to understand about a reverse mortgage is that it is a loan. The borrower (the homeowner) is responsible for making monthly payments to the lender (usually a bank). The loan is structured so that the borrower does not have to make any payments until they die, sell their home, or move out of their home. This means that the loan balance can grow over time if the borrower does not make any payments.


The interest rate on a reverse mortgage is usually higher than the interest rate on a traditional mortgage. This is because the lender is taking on more risk by lending money to someone who may not be able to repay the loan. The interest rate will also vary depending on the type of reverse mortgage you choose and your personal circumstances.

There are two main types of reverse mortgages: lump sum and line of credit. With a lump sum reverse mortgage, the borrower receives a lump sum of cash at closing. This money can be used for any purpose, but it must be repaid with interest. With a line of credit, the borrower can borrow against their home equity as needed. They only have to make monthly interest payments on the amount they have borrowed, and they can access the funds at any time.

What Is a Reverse Mortgage?
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