by 
The Curious Bag
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A reverse mortgage is a loan allowing homeowners over age 62 to use built-up equity in their homes for income or investment purposes.
Function
A reverse mortgage works in the opposite manner of a traditional mortgage---instead of the borrower paying the bank, the bank pays the borrower.
Features
The amount of equity the homeowner is allowed to borrow against is based on the homeowner's age and percentage of current debt on the home. The homeowner, however, is limited to cashing out no more than 80 percent of the total equity in the home, regardless of age.
Types
A reverse mortgage can be one of three types: a single payment lump sum, a line of credit or a monthly payment made out to the borrower. According to ReverseMortgage.org, a line of credit is most popular.
Time Frame
Reverse mortgages take longer than traditional mortgages to process---wait times for closing can be upwards of 60 to 90 days.
Misconceptions
According to ReverseMortgage.org, the borrower does not lose the house upon death, as many assume. The debt is paid in full once the house is sold, before or after the borrower's death.
Source:
National Reverse Mortgage Lenders Association: Reverse Mortgage
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