What is a reverse mortgage?

A reverse mortgage is a financial product designed primarily for homeowners who are typically at least 62 years old, allowing them to convert a portion of their home equity into cash. This is distinctively advantageous for seniors who may have fixed incomes and need additional funds for expenses such as healthcare or living costs.

In a reverse mortgage, the lender makes payments to the homeowner based on the equity of the home, and unlike traditional mortgages, the homeowner is not required to make monthly payments. The loan is repaid only when the homeowner sells the home, moves out, or passes away. This unique structure makes it a viable option for those looking to tap into their home's value without the burden of monthly payments, which is why this choice is correct.

The other choices do not accurately define a reverse mortgage. For instance, loans for first-time homebuyers typically involve monthly payments and may require a down payment. Loans for investors purchasing multiple properties focus on investment purposes, while traditional mortgages often feature fixed interest rates requiring regular payments, contrasting with the payment structure of reverse mortgages.