Introduction to Reverse Mortgages

What is a REVERSE MORTGAGE?

Many senior homeowners, age 62 years of age and older, have found that a Utah reverse mortgage is a great way for them to take advantage of the equity they have in their homes. A reverse mortgage converts a portion of the home equity into cash with no monthly payments. The majority of reverse mortgages are HECMs (Home Equity Conversion Mortgage, an FHA insured program).

A reverse mortgage is different than other Utah mortgages, with a traditional mortgage you make monthly mortgage payments, but with a reverse mortgage, the mortgage lender pays you money through monthly installments and/or a one-time lump sum payment. The amount of money you receive is dependent on your age and the value of your home.

One of the great advantages of a reverse mortgage is that you are not required to pay the loan back until the home is no longer your primary residence. Another great feature of a reverse mortgage is you can never owe more than the value of your home, no matter what.

Eventually the money paid to the homeowner is repaid with interest, however, it generally doesn’t become due until the homeowner leaves the home due to death, move, etc.
 

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Why Should I Consider Getting a Reverse Mortgage?

Getting a reverse mortgage is a big step that needs to be carefully evaluated. However, there are many advantages to a reverse mortgage.

• No monthly mortgage payments*

• Non-recourse loan - you’ll never owe more than the home is worth

• Leverage crucial retirement income

• Strategically plan for social security income

• No limitations on how the funds are used

• No prepayment penalty

• Can be used with a current primary residence or the purchase of a new home
   

Typically those who benefit the most from a Utah reverse mortgage are those who plan to stay in their homes over an extended period and have built a decent amount of equity in their homes.
 

How do I Qualify for a Reverse Mortgage?

If are over 62 years of age you are eligible for a reverse mortgage. There are additional conditions to be able to qualify.

• Own the property outright or have considerable equity

• Occupy the property as your principal residence

• Not be delinquent on any federal debt

• Participate in a consumer information session from a HUD-approved counselor
   

Consumer Protections

• Non-borrowing spouses under 62 years of age are now protected from being forced from the home

• All FHA HECMs are insured through the Federal Housing Administration (FHA)

• Borrowers have no limit as to how long they can stay in the home*

• When the loan becomes due, the estate can buy your home at 95% of the current value, regardless of what is owed

• Education – financial counseling is required
   

We can help you figure out if you’re eligible for a Utah reverse mortgage. Call us, your Utah mortgage broker, at 801-272-0600.
 

*HUD Mortgagee Letter 2014-10 - This material is not from HUD or FHA and has not been approved by HUD or any government agency.

*The borrower must meet all loan obligations, including living in the property as the principal residence and paying property charges, including property taxes, fees, hazard insurance. The borrower must maintain the home. If the homeowner does not meet these loan obligations, then the loan will need to be repaid.