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What is a reverse mortgage?
A reverse mortgage is a special type of loan used by seniors 62 years of age and older to convert the equity in their home into cash. The loan provides tax-free funds to the borrower, and unlike "traditional" mortgages where the loan interest and principal are paid to the lender on a monthly basis, a reverse mortgage defers payment until the maturity event. Maturity of the loan occurs when the homeowner either sells the property, or leaves the residence permanently.
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Utah & National Counselors
Frequently Asked Questions
Benefits of a reverse mortgage
- No repayments until the home is sold or the borrower permanently leaves the residence
- Unlocks the equity built up in your home
- No income or credit qualifications
- The proceeds are received as tax-free income
- Interest is paid at loan maturity, not during the loan
- Receive funds as a lump sum, monthly payment, line of credit, or any combination of the three
- In the case of joint borrowers, payments continue in the event of the death of one party
- After the lender is paid through the estate, all remaining equity is paid to the heirs
- Proceeds do not effect Social Security or Medicare benefits
There are no limitations on how the proceeds can be used. The borrower may:
- Pay off debt, including mortages and credit card debt
- Make necessary home repairs, modifications or improvements
- Pay for home health care
- Pay real estate taxes
- Purchase long-term care insurance
- Supplement retirement income
- Assist family members with college tuition and expenses
- Fund an estate plan
- Travel
Reverse mortgages are a safe income option for seniors
- You retain ownership of the home and your name remains on the title
- The loan is non-recourse, neither you nor your heirs will ever owe more than the value of the property
- F.H.A. insured and F.N.M.A. guaranteed loan programs available
- Independent reverse mortgage counseling is required and available at no cost
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