Reverse Mortgages

May 01, 2020
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For many of our clients and seniors in Utah, the equity in their home is their largest single asset. However, that asset is unavailable to use unless they use a home-equity loan. A conventional loan really doesn't free up the equity because the money has to be paid back with interest. A reverse mortgage is a risk-free way of tapping into home equity without creating monthly payments and without requiring the money to be paid back during a person's lifetime. Instead of making payments the cash flow is reversed and the senior receives payments from the bank. Thus the title "reverse mortgage".Put simply, a reverse mortgage enables seniors to convert equity into tax-free funds or monthly cash flow, eliminate payments on their current mortgage, or purchase a home without monthly mortgage payments.2

Myths of Reverse Mortgages1:

  • "The lender could take my house." The homeowner retains full ownership. The Reverse Mortgage is just like any other mortgage; you own the title and the bank holds a lien. You can pay it off anytime you like.
  • "I can be thrown out of my own home." Homeowners can stay in the home as long as they live, with no payment requirement.
  • "I could end up owing more than my house is worth." The homeowner can never owe more than the value of the home at the time the loan is due.
  • "My heirs will be against it." Experience demonstrates heirs are in favor of Reverse Mortgages.

Sources:
1. http://www.careutah.com/services_members/11_about_reverse_mortgages.htm

2. https://www.bankofutah.com/home-loans/loan-options/reverse-mortgage-myths-and-realities