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Homebuyer definition: Reverse mortgage

by Dianne Drinkwater 05/27/2024

older couple sitting in their living room with agent discussing finances

When searching for funding in the real estate world, it’s crucial to understand each loan type and its definition. Reverse mortgage is one important term you may encounter when thinking about building equity in your home. But what does reverse mortgage mean?

What is a reverse mortgage?

A reverse mortgage refers to a loan type available to homeowners aged 62 or older, and permits them to turn their home equity into income without monthly mortgage payments. A reverse mortgage loan essentially lets you borrow money, nearly uninhibited, against the equity you’ve already invested in your home.

What is a home equity conversion mortgage or “HECM?”

There are several types of reverse mortgages to choose from, depending on a variety of factors. The most common form of reverse mortgage is the HECM. 

An HECM is also sometimes called a Federal Housing Administration (FHA) reverse mortgage, and is only available to those who meet FHA qualification requirements.

When to consider a reverse mortgage

To those who qualify, there can be definite advantages to a reverse mortgage. Reverse mortgage loans allow many homeowners the flexibility to supplement their income later in life and benefit from their investment in their homes. They can also be helpful in situations where significant costs, such as healthcare, necessitate a lump sum payment.

However, reverse mortgages don’t make sense for everyone. It’s best to find a trustworthy lender or loan program before considering this type of loan, and discuss your options with a trusted financial advisor. 

About the Author
Author

Dianne Drinkwater

Dianne is a dedicated full-time Realtor in Northeast Florida, known for her client-focused approach and expertise in the real estate market. She combines her passion for photography with her real estate listings to ensure high-quality visuals and presentations, setting her apart in a competitive field.

  • Client-Centered Approach: Dianne emphasizes a personalized experience for buyers and sellers, offering expert guidance throughout the real estate process. She is a member of several professional organizations and holds specialized designations. Military on the Move agent, Leading RE-Relocation Specialist, Shearwater Certified 2017 and Nocatee Certified 2025, 2025 RESA-Certified Staging Advocate.
  • Passion for Presentation: She believes that presentation is crucial, utilizing professional photography and staging techniques to enhance property appeal, ensuring every listing makes a strong first impression. She was a Master Gardener in both Florida and Maine to help you with first impressions as you approach the property. Dianne focuses on providing knowledgeable, client-centered guidance throughout the real estate process, positioning herself as a trusted advisor, not just a salesperson.

She prides herself on being your "Forever Agent."