When most people hear the term reverse mortgage, they assume it’s complicated or risky. But in reality, a reverse mortgage is simply that—a mortgage in reverse.
In the short videos below, Jeremy Shipp, retirement planner and executive coach for MoneyTrax, first breaks down the core concept of a reverse mortgage in under one minute using the Circle of Wealth®’s Personal Economic Model. Then, he walks you through the full Reverse Mortgages 101 presentation—demonstrating how to introduce this concept effectively during your client meetings.
But first, here’s a quick written explanation if you prefer to read:
What Is a Reverse Mortgage?
A traditional mortgage—also called a forward mortgage—involves borrowing money to buy a home and then gradually paying down that loan over time by making monthly payments to the bank. With each payment, your loan balance decreases.
A reverse mortgage works in the opposite direction.
If you qualify (typically age 62 or older), a reverse mortgage allows you to receive payments from the lender instead of making them. These payments can come in the form of a lump sum, a monthly amount, or a line of credit. Over time, your loan balance increases as you receive money, rather than decreasing like a traditional mortgage.
So Why Use a Reverse Mortgage?
For many retirees, a reverse mortgage offers a way to:
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Access home equity without selling the home
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Supplement retirement income
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Cover unexpected expenses or medical costs
The homeowner remains on the title and can continue living in the home as long as it remains their primary residence and other loan terms are met.
The Bottom Line
It’s not a complicated product—it’s a mortgage, but in reverse. Instead of you sending money to the bank, the bank sends money to you.
To see this concept explained visually, check out the two quick concept videos provided below:
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