Kovats Real Estate School Practice Test 2025 – 400 Free Practice Questions to Pass the Exam

A reverse mortgage is a financial product designed specifically for homeowners aged 62 or older, allowing them to access the equity in their homes without the need to sell. This type of loan converts a portion of the home equity into cash, which can be used for various expenses, such as healthcare, living costs, or home improvements. Importantly, unlike traditional mortgages, borrowers are not required to make monthly payments on a reverse mortgage. Instead, the loan is repaid when the homeowner sells the home, moves out, or passes away. This arrangement provides a significant benefit to seniors who may need additional income while remaining in their own homes.

Understanding the nature of a reverse mortgage helps differentiate it from other types of loans. Standard mortgages, for instance, require the borrower to make monthly payments on the principal and interest, which does not apply to a reverse mortgage. Government-backed loans for first-time homebuyers typically aim to facilitate home purchase rather than access existing equity. Similarly, loans taken against investment properties for capital improvements serve different purposes, focusing on properties that generate income rather than allowing for cash flow for homeowners looking to tap into their home equity.