With a reverse mortgage, the lender gives you money instead through the equity you’ve built up over your lifetime of living in the home. Essentially, your loan is being paid by your equity, so a reverse mortgage results in reducing equity and increasing debt. However, you do not need to make mortgage payments on the home while the title to the home remains in your name or the name of your trust.

You can also get a reverse mortgage on the purchase of a new home, assuming it will become your primary residence. If you sell your home and use some of the cash proceeds as a down payment you can use a reverse for purchasing a home loan to acquire the new house. If you don’t want to tie up all of your money in a house to be prepared for unexpected expenses, want increased cash flow in retirement, or cannot afford to pay a monthly mortgage payment, this option will work well for you.