What is a reverse mortgage loan?

A reverse mortgage is a financial tool that allows older homeowners to draw on the equity in their homes as a means of paying for various other living expenses. In recent years, a growing number of Texas residents have opted for reverse mortgages as a way to finance their retirement. A reverse mortgage is, as the name might suggest, much like a typical mortgage loan in reverse. Instead of making regular monthly payments to the lender, the owner of a property may receive monthly payments from the lender by drawing against the equity in his or her homestead property. With a regular mortgage, one’s balance or payoff is reduced with each monthly payment. With a reverse mortgage, the balance or payoff grows larger with each monthly advance of funds to the homeowner and/or the application of related fees. When the homeowner leaves the home (either because they choose to sell it, or because they have passed away), the balance becomes due and payable.