A mortgage designed to help older homeowners access their home equity is known as what?

A mortgage designed to help older homeowners access their home equity is known as a reverse-annuity mortgage. The primary purpose of a reverse-annuity mortgage is to allow seniors to convert a portion of their home equity into cash without having to sell their home or make monthly mortgage payments. Instead, the lender makes payments to the homeowner, which can be received as a lump sum, monthly payments, or in a line of credit form. The loan is repaid when the homeowner sells the house, moves out of the home, or passes away.

This financial tool is particularly beneficial for older adults who may have limited income but possess significant home equity. It gives them the financial flexibility to cover living expenses or for any other needs while allowing them to remain in their own home. The alternative options do not facilitate this specific need for access to home equity in the same way. Standard mortgages generally require monthly payments and do not cater specifically to older homeowners, while fixed-rate mortgages are structured for traditional home buying or refinancing. Home equity loans do allow access to equity, but they typically come with monthly repayment obligations and are not specifically designed for an older demographic's needs.