reverse mortgage

Definition

A loan that pays elderly homeowners monthly while they live in their home, essentially converting equity to cash until they die or move. Your house paying you rent, with a hefty price tag.

Example Usage

Her grandmother took a reverse mortgage to afford retirement, betting that monthly payments beat leaving the house to her ungrateful children.

Origin

Created in 1961 by Nelson Haynes, formalized as HECMs (Home Equity Conversion Mortgages) in 1988

Fun Fact

Despite celebrity endorsements, reverse mortgages carry high fees and complex terms that have led to foreclosures when seniors didn't maintain property taxes or insurance.

Source: Senior housing and alternative mortgage terminology

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