This special type of home loan lets seniors convert part of their home’s equity into cash. But unlike a traditional equity loan, there is no repayment until you’re not going to use the home as your principal residence or you fail to meet the obligations of the mortgage. Interestingly, The Housing and Economic Recovery Act of 2008 allows seniors to purchase a new principal residence and obtain a reverse mortgage within a single transaction. This enables seniors to move closer to family members, or downsize to homes that better meet their physical needs, without the expense of a second closing.
Needless to say, reverse mortgages are complex, so talk to a real estate specialist or your financial advisor to make sure it’s right for your situation.