What term describes the procedure that allows homeowners to access their equity through a reverse mortgage?

The term that describes the procedure allowing homeowners to access their equity through a reverse mortgage is equity conversion. This process enables eligible homeowners, generally those who are older and have significant home equity, to convert that equity into cash without having to sell their home.

In a reverse mortgage, the lender makes payments to the homeowner based on the accumulated equity in the house, which can provide a source of income or funds for various needs, such as healthcare or living expenses. Unlike a traditional mortgage, where the homeowner makes monthly payments to the lender, in a reverse mortgage, the loan amount increases over time and is repaid only when the homeowner sells the house, moves out, or passes away.

Understanding equity conversion is essential for homeowners considering how to tap into their property's financial potential while still residing in it.