A reverse mortgage is the commonly used term for a federally insured Home Equity Conversion Mortgage ("HECM"). It is a loan that lets you turn your home's equity into cash or pay off an existing mortgage.
Homeowner must be at least 62 years old.
There must be sufficient equity in the home.
It must be for your primary residence.
Mandatory HECM counseling is required.
Existing mortgage payments can be eliminated.
The loan proceeds are tax-free.
You stay in your home and maintain title.
Your heirs inherit any remaining equity after paying off the HECM loan.
Neither you nor your heirs can ever owe more than the home is worth - since the HECM is a non-recourse loan, any shortage is covered by the FHA, not by you or your estate.
As long as taxes, insurance and HOA fees are paid, and the home is maintained, the loan can not be cancelled by the lender.