Yes. It works like this:
Let’s say that you have a home worth $150,000 now that you own free and clear. It could be getting too much to care for, too much yard, or too many stairs, either way you want to move. You’re concerned though because you’ve done some looking around and any nice patio home or condo is more than what you will get from your current home and you do not want to get a mortgage with a monthly payment, but you also don’t want to completely deplete all your savings either.
This is where the reverse mortgage comes in. Let’s say that you found a very nice patio home for $200,000 and we can loan you $110,000 on this new home. You have $130,000 from the sale of your old home, (remember all the costs associated with selling a home), that you can use. But with the reverse mortgage you only have to use $90,000 for the down payment.
So you keep $40,000 from the sale of your old home, and you get to move into the new home with no mortgage payment. You get to “downsize, but upgrade”.
