Which of the following best describes a Reverse Mortgage?

Which of the following best describes a Reverse Mortgage?

• A. A loan paid back in monthly installments
• B. A mortgage that pays the borrower based on home equity
• C. A standard home purchase loan
• D. A loan for purchasing second properties

Answer: (B)

A Reverse Mortgage is specifically designed to provide homeowners, typically those who are seniors, with access to the equity they have built up in their home. This type of mortgage allows the borrower to receive payments from the lender, rather than making monthly payments to pay off the loan. The loan is repaid when the homeowner sells the house, moves out, or passes away, effectively allowing them to tap into their home equity without the burden of monthly mortgage payments. This option can be particularly beneficial for retirees who need supplemental income without losing their home. The other options describe different types of loans. Monthly installment loans involve regular payments from the borrower, a standard home purchase loan typically requires the buyer to pay back the loan over a set term with monthly installments, and loans for purchasing second properties focus on acquiring additional real estate rather than accessing home equity. Thus, the characteristics and function of a Reverse Mortgage distinctly align with the description provided in the correct answer.

A Reverse Mortgage is specifically designed to provide homeowners, typically those who are seniors, with access to the equity they have built up in their home. This type of mortgage allows the borrower to receive payments from the lender, rather than making monthly payments to pay off the loan. The loan is repaid when the homeowner sells the house, moves out, or passes away, effectively allowing them to tap into their home equity without the burden of monthly mortgage payments. This option can be particularly beneficial for retirees who need supplemental income without losing their home.

The other options describe different types of loans. Monthly installment loans involve regular payments from the borrower, a standard home purchase loan typically requires the buyer to pay back the loan over a set term with monthly installments, and loans for purchasing second properties focus on acquiring additional real estate rather than accessing home equity. Thus, the characteristics and function of a Reverse Mortgage distinctly align with the description provided in the correct answer.