by 
The Curious Bag
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A reverse mortgage is a type of debt that allows a borrower who is 62 or older use the equity in his residence to provide additional income or to reduce debts.
Significance
A reverse mortgage is the exact opposite of a traditional mortgage. Instead of the borrower paying the bank, the bank pays the borrower.
Types
There is no restriction on the use of the reverse mortgage. However, a borrower has to choose a lump sum, a line of credit or a monthly payment.
Function
A reverse mortgage allows a borrower to use the equity built up in her home. These mortgages are limited by the age of the borrower and the equity in the home compared with the loan amount.
Time Frame
The older the borrower at the time of the reverse mortgage, the higher the percentage of equity he is allowed to borrow against.
Misconceptions
Many borrowers assume that a bank gets the home in the event of the death of a borrower who has a reverse mortgage. However, the bank gets only the amount of the reverse mortgage, and the heirs get the remaining profit from the sale.
Source:
HUD.gov: Top Ten Things to Know if You're Interested in a Reverse Mortgage
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