Which mortgage type allows homeowners to access their equity without monthly payments?

A reverse mortgage is designed specifically to allow homeowners, typically older adults, to access their home equity without the obligation of making monthly mortgage payments. It enables them to convert a portion of their home equity into cash while continuing to live in their home. The loan amount, along with interest, is repaid when the homeowner sells the home, moves out, or passes away.

This unique characteristic sets reverse mortgages apart from other mortgage types. For instance, conventional loans and subprime mortgages require monthly payments, as they are traditional loans that amortize over a set period. A Home Equity Line of Credit (HELOC) also involves monthly payments, as it functions similarly to a credit card that allows borrowers to draw on their home equity but requires repayment of the borrowed amounts. Thus, a reverse mortgage provides homeowners with a financial tool that accommodates their needs without the immediate pressure of monthly payments.