Cliff AuerswaldPresident, All Reverse Mortgage, Inc. · President at All Reverse Mortgage, Inc. (ARLO™) NMLS#14041 Company NMLS #13999

Reverse Mortgage vs. Traditional Loan: Key Differences Explained by ARLO™

13 Mar 2025 · 2 min

Watch on YouTube

1:33

In this video, ARLO (presented by Cliff Auerswald) explains how a reverse mortgage works compared to a traditional mortgage. He outlines that traditional mortgages require structured monthly payments that reduce the loan balance and build home equity over 15‑ or 30‑year terms. In contrast, a reverse mortgage allows borrowers to forgo monthly payments; accrued interest is added to the loan balance, which can erode equity unless the borrower makes voluntary payments. The video details repayment options for reverse mortgages (interest‑only, interest + principal, or any amount), the circumstances under which the loan is repaid (sale of the home, end of life, or voluntary repayment), and emphasizes that the homeowner remains responsible for property taxes and homeowner’s insurance. Finally, viewers are directed to a free online calculator for eligibility, real‑time rates, and ARLO’s built‑in advice to help select the best program.

Chapters

In the following video, I will explain how a reverse mortgage works in comparison to traditional loan types. Let's jump right into it. With a traditional mortgage, you make structured monthly payments, usually over 15 or 30 years. The amount you owe is reduced by each payment that you make, and therefore the equity that you have in your home increases over time. Now, on the other hand, with a reverse mortgage, you have the option to not make any monthly mortgage payments. Instead of writing a payment back to the bank, that interest payment is simply added to the loan balance, and therefore your equity position may decrease over time. While mortgage payments are not required, you may choose to make monthly payments to keep your loan balance from rising. Reverse mortgages can seem complicated, but in reality, it's simply a loan against your home that can be repaid at any time, whether that be at the end of life, when your home sells, or by making voluntary repayments while you're alive. Repayments can be made as interest only, interest plus principal, or any amount that you choose. Remember, you're in the driver's seat. With a reverse mortgage, you own your home and you are responsible for maintaining future property charges such as your taxes and your homeowner's insurance. Ready to learn more? Follow me to my free online calculator for eligibility real-time rates, and built-in Arlo advice to help you select the best program.