Reverse mortgage Meaning and Definition

Pronunciation

/ˈriːvərs ˈmɔːrɡɪdʒ/ 🔊

Part of Speech

Noun

Definition

A type of loan that allows homeowners to borrow money using the equity in their property, without making monthly payments.

Examples

• She obtained a reverse mortgage to pay for her retirement home.
• He used a reverse mortgage to fund his grandchildren’s education.

Synonyms

• Home equity loan
• Elderly loan

Antonyms

• First mortgage
• Home equity line of credit

Additional Information

Reverse mortgages can Provide a steady stream of income for homeowners, but they can also encumber the property and reduce the amount of inheritance for heirs. It’s crucial to understand the terms and conditions before making a decision.

Reverse mortgage lenders must comply with the Federal Housing Administration’s (FHA) guidelines to ensure that borrowers are informed and protected. Borrowers must meet certain qualification criteria, including being at least 62 years old, owning the property outright or owing a small balance on the mortgage, and living in the home as their primary residence.

Reverse mortgages are often used to cover living expenses, pay for medical bills, and fund home modifications.

Etymology

The term “reverse mortgage” originated in the 1960s and 1970s, when homeowners began seeking alternative ways to tap into their equity without making monthly payments.

Usage Notes

When using the term “reverse mortgage” in conversation, it’s essential to understand the context and clarify the meaning to avoid confusion.

Cultural References

Reverse mortgages have been featured in various films, TV shows, and books, often as a plot device to depict financial struggles and solutions.

Idiomatic Expressions or Phrases

“Using the equity in your home” is a common phrase associated with reverse mortgages.

Related Words or Phrases

• Home equity
• Equity loan
• Loan modification

Collocations

• reverse mortgage loan
• reverse mortgage program
• reverse mortgage calculator

Frequency of Use

Reverse mortgages are increasingly popular, especially among seniors and retirees, due to their flexibility and potential financial benefits.

Common Misspellings

• reverse morgage
• reverse mortage
• revers mortgage