What is a reverse mortgage designed for?

A reverse mortgage is specifically designed to enable homeowners, particularly seniors, to convert a portion of their home equity into cash while retaining full ownership of their property. This financial tool allows individuals aged 62 and older to access the equity built up in their homes without having to sell the property or make monthly mortgage payments. Instead, the loan is repaid when the homeowner sells the home, moves out, or passes away.

This product is particularly beneficial for retirees looking to supplement their income in retirement by using the value of their homes, which otherwise might not generate cash flow. By allowing borrowers to access cash based on their home’s value, reverse mortgages provide a flexible financial solution without sacrificing home ownership.

The other options do not align with the primary purpose of reverse mortgages. Assisting first-time buyers with down payments relates to traditional mortgage products designed for acquiring property, while lowering interest rates typically applies to refinancing existing loans, not reversing mortgages. Lastly, providing temporary financial relief for sellers does not fit the function of a reverse mortgage, as it is intended for homeowners wishing to tap into their equity rather than for sellers who might be in a position to sell their home.