In a reverse mortgage, when is the loan typically paid back?

In a reverse mortgage, the loan is typically paid back upon the sale of the home or the homeowner's death. This is a defining characteristic of reverse mortgages, which are designed to allow older homeowners to convert part of their home equity into cash without having to sell their home or make monthly mortgage payments.

The loan is repaid when the homeowner either sells the property or passes away, at which point the estate or the heirs may choose to repay the loan using the proceeds from the sale of the home or other assets. If the homeowner dies, the heirs can either pay off the reverse mortgage and keep the home, or sell the home to settle the loan. This structure allows homeowners to access funds while still living in their homes without the immediate obligation to make payments, making it a financial tool geared towards supporting individuals in retirement.

While homeowners have the option to repay the loan earlier if they choose, it is not a requirement, which distinguishes this option from conventional loans that typically have more rigid repayment terms.