The reverse mortgage is a somewhat recent evolution in the mortgage market that provides seniors with the ability to obtain a loan that enables them to unlock the equity in their home. This addresses a problem that many retired seniors face who either have paid off their mortgages or have small mortgages: they are "house rich" but "cash poor".

Prior to the reverse mortgage, seniors who needed money had to choose between selling their home and taking out an equity loan. A reverse mortgage is similar to a home equity loan, however there are key differences. These are:

1. You must be 62 years of age to obtain a reverse mortgage.

2. The borrower does not making payments on the loan while they are living in the house.

3. Loan payments are deferred until: the homeowner dies, moves or leaves the home.

The amount of money borrowed depends on the amount of equity in the property. Equity is simply the difference between the market value and the amount owed on the home. Another benefit of a reverse mortgage is that the homeowner cannot owe more than the house is worth.