Mortgage Payment

• Conventional mortgages require you to make monthly payments until the mortgage is paid off. A reverse mortgage, however, requires no payments until the borrower sells the home or dies.
  
  

Interest

• In a conventional mortgage, the interest is charged and paid over the life of the loan. Reverse-mortgage interest is charged starting at the day you begin to receive the loan proceeds. It isn't paid, however, until the reverse mortgage loan comes due.
  
  

Loan Principal

• The borrower of a conventional mortgage essentially signs a note borrowing a set amount of money (the loan principle), that is paid to the home's seller. Once the sales transaction is complete, the borrower moves into the home and begins making monthly payments to repay the principal plus interest. A reverse-mortgage borrower already owns the home, but borrows against that home to get either a lump sum payment, a line of credit, or regular payments of the loan's principal.
  
  

Loan Classification

• A conventional mortgage is like a true mortgage loan, while a reverse mortgage is more like a home equity loan.
  
  

Misconceptions

• Contrary to belief, while paying back a conventional loan and using the principal of a reverse mortgage, the borrower owns the home. The difference is that the borrower is debt free at the end of a conventional mortgage and handed a large bill at the end of a reverse mortgage.