Tips to help you understand, How Does Interest Work On A Reverse Mortgage? A reverse mortgage is a program created by the federal government to help senior homeowners (62 and over) maintain their residence while receiving monies for their home; as if it was sold. The program is as it states; a reverse mortgage. On a normal mortgage, interest and principal decrease as mortgage payments are made by the mortgagee. On a reverse mortgage, interest and principal increase as payments are received by the mortgagee. It is confusing how the numbers work and generally begs the question, How does Interest work on a reverse mortgage? Increasing Principal Usually when someone purchases a house, the goal is to pay off the house. Paying off the house ensures that the owner will live payment free (aside from taxes and insurance). With a reverse mortgage, it works just the opposite. A paid off or partially paid off residence is used for collateral to begin paying the homeowner.

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