Definition: The reverse mortgage is a type of home loan in which the borrower, not the lender, sells their property to pay back the interest on the mortgage loan. Specifically, it involves selling the equity (the difference between the principal balance of the property and its value at the time of sale) of the property to another person or organization. This prevents the lender from having an ownership stake in the home, thereby reducing the risk of defaulting on the mortgage. The definition of "reverse mortgage" can vary depending on the specific circumstances, such as whether it's a single family home or multiple homes, whether the borrower is living alone or with someone else, and so forth. However, generally speaking, the goal of the reverse mortgage is to provide liquidity for homeowners who might need extra income to cover their expenses, particularly when selling their property or downsizing. For more specific details on how a reverse mortgage works, it's recommended that you consult with a licensed real estate agent or financial advisor who can provide personalized advice based on your individual circumstances.
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