In a reverse mortgage, when is the loan typically repaid?

In the case of a reverse mortgage, the loan is typically repaid upon the death of the mortgagors or the sale of the property. This type of loan allows homeowners, usually seniors, to access the equity in their home without having to make monthly mortgage payments. Instead, the loan balance increases over time as interest accumulates.

When the homeowners pass away, the loan is generally settled through the sale of the home, allowing the lender to recover the amount owed. Alternatively, if the homeowners decide to sell the property while they are still living, the loan can also be repaid using the funds from that sale. In both scenarios, this repayment structure aligns with the nature of reverse mortgages, where homeowners remain in their residence and maintain ownership until certain events occur, such as death or sale.

The structure of reverse mortgages ensures that the homeowners can utilize the funds while still living in their home, turning part of their home equity into cash without the need for monthly repayments, making understanding the repayment condition crucial for homeowners considering this option.