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Tiffiny Alexander, Sotheby's International RealtyPhone: (707) 339-0600
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Reverse mortgage definition & considerations

by Tiffiny Alexander 11/20/2022

older couple sitting in their living room with agent discussing finances

When searching for funding in the real estate world, it’s crucial to understand each loan type and its definition. Reverse mortgage is one important term you may encounter when thinking about building equity in your home. But what does reverse mortgage mean?

What is a reverse mortgage?

A reverse mortgage refers to a loan type available to homeowners aged 62 or older, and permits them to turn their home equity into income without monthly mortgage payments. A reverse mortgage loan essentially lets you borrow money, nearly uninhibited, against the equity you’ve already invested in your home.

What is a home equity conversion mortgage or “HECM?”

There are several types of reverse mortgages to choose from, depending on a variety of factors. The most common form of reverse mortgage is the HECM. 

An HECM is also sometimes called a Federal Housing Administration (FHA) reverse mortgage, and is only available to those who meet FHA qualification requirements.

When to consider a reverse mortgage

To those who qualify, there can be definite advantages to a reverse mortgage. Reverse mortgage loans allow many homeowners the flexibility to supplement their income later in life and benefit from their investment in their homes. They can also be helpful in situations where significant costs, such as healthcare, necessitate a lump sum payment.

However, reverse mortgages don’t make sense for everyone. It’s best to find a trustworthy lender or loan program before considering this type of loan, and discuss your options with a trusted financial advisor. 

About the Author
Author

Tiffiny Alexander

Tiffiny Alexander is an award-winning broker in both California and Arizona. She’s a wine country native, bringing more than two decades of market knowledge and industry experience to those she serves. The hallmark of her business acumen is marked by her blue-collar-work-ethic roots coupled with a cornerstone concept of always being able to put her name to her work. Tiffiny has handled an array of residential, land, and commercial real estate requisites. She is an International Certified Luxury Home Marketing Specialist, leveraging a global reach of industry relationships to better serve her clients. She enjoys the opportunity to work