In a reverse-annuity mortgage, how do owners access funds?

In a reverse-annuity mortgage, owners access funds by borrowing against their home equity. This type of mortgage allows homeowners, typically older individuals who have built up significant equity in their homes, to convert that equity into cash without having to sell their property. The lender disburses payments to the homeowner, which can be received in various forms such as monthly payments, a lump sum, or a line of credit, depending on the specific terms of the mortgage.

Unlike traditional mortgages, where monthly payments are made to the lender, in a reverse-annuity scenario, the total loan balance can increase over time as interest accrues, and the homeowner does not have to make any monthly payments until they sell the home, move out, or pass away. Therefore, utilizing home equity through this means can provide financial support to homeowners who may need additional income, especially during retirement years.