What is a reverse mortgage loan?

A reverse mortgage is a mortgage loan, usually secured by a residential property, that enables the borrower to access the unencumbered value of the property. The loans are typically promoted to older homeowners and typically do not require monthly mortgage payments. Borrowers are still responsible for property taxes and homeowner's expenses. Reverse mortgages allow elders to access the home equity they have built up in their homes now, and defer payment of the loan until they die, sell, or move out of the home.

A reverse mortgage4 is a special kind of home loan for senior citizens who are above the age of 60. This type of loan does not need any payments on a monthly basis but still the people who opt for such a loan have to take care of property taxes and homeowner's insurance. 

Reverse mortgage loans help senior citizens to defer or postpone payment of the home loan till their death or when they sell or move out just because they have accessed the home equity that has been built up in their houses. The interest4 which builds up is added to the loan balance at the end of each month since there are no mortgage payments needed on such types of loans3. 

The loan balance rises gradually and can even grow to exceed the value of the home mainly at the time when the value of the house is declining or if the person involved keeps on living in the home for more than the expected time period. However, the borrower is generally not required to repay any additional loan balance in excess of the value of the home. The reverse mortgage is also known as a Home Equity Conversion Mortgage.