Understanding Reverse Mortgage Repayments and Interest with Cliff

A reverse mortgage does not require any mortgage payments. You get a monthly statement and you'll see on the statement there's no coupon because there's no repayment required. So by default, the bank or servicer, how they collect their interest is they just add it to the owing balance of the loan. So over time, you're going to have a loan balance that's continually rising. That's why it's called a negative amortizing loan. The repayment is completely voluntarily. If you'd like to turn around and make a check back towards your reverse mortgage balance at any given time, you're more than welcome to. There is no prepayment penalty on a reverse mortgage loan. They were designed for seniors on fixed incomes, and by default, there is no payment due, but you're more than welcome to make a payment.