My Perfect Mortgage
Talk to Me Like I’m 6 How Does a Reverse Mortgage Work
4 minute read
April 25, 2023

Reverse mortgages aren’t easy to understand.

Well, actually they kind of are.

They are regular mortgages. They are loans that are taken out on a house. That is all.

Oh, you want to know more?


Instead of making a payment each month, no payment is due. Ever. For the rest of your life. Unless you want to make a payment, then you can.

The mortgage can even pay the homeowner each month.

End of article.

But since that’s a bit short, let’s go on. In terms a child could understand, how does a reverse mortgage work?

A reverse mortgage stops the monthly mortgage payment

You had a mortgage payment each month. Now you don’t.

That gives you extra money each month for other stuff.

A reverse mortgage doesn’t take your money. But you still have to pay taxes, insurance, and HOA dues, and keep the house nice.

A reverse mortgage can give you extra money

If you don’t owe very much on the house, you can get extra money. The reverse mortgage can send you money each month.

Or, you can get a piggy bank with a removable lid. This is called a line of credit.

A lot of homeowners choose a line of credit because they don’t know how much money they will need someday, or when.

You can stay in your home forever

The mortgage company can never make you leave your home when you have a reverse mortgage.

You can stay until you die. Or, you might have to live somewhere else someday if you need extra help. That’s okay, too.

If you move out, you have a whole year to get a different kind of loan or sell the home.

A reverse mortgage gets bigger

A normal loan gets smaller when you send money to the bank every month.

A reverse mortgage gets bigger every month. This is because you don’t have to send a payment.

The homeowner’s kids won’t have to pay money either

Remember how I said a reverse mortgage gets bigger every month?

Someday, the loan could get bigger than the house. Not bigger than the house itself, but more dollars than someone would pay for the house.

Homeowners worry about heirs (a fancy word for their kids). Will the kids be stuck paying off the mortgage if they can’t sell the home?

No. If the loan becomes bigger than the house value, heirs can give the house to the lender. The government covers any lost money.

The kids can sell the home and make money, too. That happens if the reverse mortgage is less than what the house sells for someday.

You can get a reverse mortgage if you’ve had your 62nd birthday

If you’re only 50, you have to wait. You need 62 candles on your birthday cake before you can get a reverse mortgage.

You can also get one if you’re much older.

The home is still yours

You don’t give your house to the bank when you get a reverse mortgage. It’s still yours. Just like with a regular mortgage.

You just have to promise to pay the money back someday. Just like a regular mortgage.

P.S. A reverse mortgage is just like a regular mortgage.

A reverse mortgage can save your piggy bank

Grownups have to go to work every day. But then one day, they stop going to work. That’s because they’ve saved money for a long time.

A reverse mortgage helps you spend less of what you saved all those years.

You don’t have a mortgage payment each month. This helps keep your piggy bank fuller for longer.

A reverse mortgage isn’t a trick

Some people are bad and try to take money from grandmas and grandpas. But that doesn’t mean reverse mortgages are bad, too.

They are not bad or good. They are just a tool that help some people in certain situations.

But it’s still a good idea to make sure the person you get your reverse mortgage from is good, not bad.

Find out what other people think about the person you get your reverse mortgage from.

Talk to a good reverse mortgage person here.


Reverse mortgages don’t have to be scary. Or hard. Remember, they are just like regular mortgages. That is all.

Now that you understand reverse mortgages, you can see if they are right for you. Start here.

Our advise is based on experience in the mortgage industry and we are dedicated to helping you achieve your goal of owning a home. We may receive compensation from partner banks when you view mortgage rates listed on our website.