Reverse Mortgage Basics
A reverse mortgage can be a helpful tool for homeowners age 62 and older. It allows you to access the equity in your home without making monthly principal and interest payments. Many people use it to supplement retirement income, pay for medical or living expenses, or create financial flexibility while staying in the home they love.
This material is not from HUD or FHA and has not been approved by HUD or a government agency.
Reverse Mortgage Explained
In this video, I explain how reverse mortgages work, who qualifies, and the key benefits and considerations. Whether you’re exploring options for retirement income or helping a parent with housing decisions, this is a clear starting point.
Who Qualifies for a Reverse Mortgage?
- Homeowner age 62 or older
- Live in the home as your primary residence
- Own the home outright or have a low mortgage balance that can be paid off at closing
- Ability to keep up with property taxes, homeowners insurance, and home maintenance
How Much Can You Receive?
The amount you can access depends on:
- Current interest rates
- Appraised value of your home
- Age of the youngest borrower (or eligible non-borrowing spouse)
- FHA mortgage insurance requirements
Disbursement Options
- Term Payments – Equal monthly payments for a set period of time
- Tenure Payments – Equal monthly payments for as long as you live in the home
- Line of Credit – Withdraw funds when you need them until the line is used up
- Lump Sum – A single disbursement at closing, often used for large one-time needs
Which Option Fits You Best?
- Term Payments – reliable income for a set period, e.g., bridging the gap before Social Security or pension benefits
- Tenure Payments – lifetime income while staying in your home
- Line of Credit – flexible access for emergencies or growing financial safety net
- Lump Sum – large upfront amount for paying off mortgage or one-time expenses
Each choice has unique benefits and tradeoffs. I review your full situation—age, home value, financial goals—and show you exactly how each option would work for you.
What Happens Later?
- Sell the home and use proceeds to pay off the balance
- Refinance into a new loan and keep the home
- Pay the balance in cash to retain ownership
Key Benefits of a Reverse Mortgage
- No monthly mortgage payments required (as long as obligations are met)
- Flexibility in how you receive funds
- Ability to age in place while using home equity to cover expenses
- FHA insurance guarantees you never owe more than the home’s value at sale
Responsibilities of the Borrower
- Pay property taxes and homeowners insurance
- Keep the home in good condition
- Continue to live in the home as your primary residence
Reverse Mortgage Client Examples
Example 1: Right-Sizing Without Draining Cash
A Bountiful couple sold their large two-story home and purchased a single-level property better suited for retirement. Instead of paying cash, they used a HECM for Purchase. This allowed them to buy the new home, keep their retirement funds invested, and still have no monthly mortgage payment for life in their new property.
Example 2: Debt Consolidation and Cash Flow Relief
A Clearfield homeowner in her late 60s was still making a $900 mortgage payment while carrying $20,000 in credit card balances. By refinancing into a HECM, she eliminated the mortgage payment entirely and paid off the credit cards. The change freed up over $1,200 per month in her budget, giving her peace of mind and stability.
Example 3: Tax and Estate Planning
A retired Kaysville couple wanted to avoid tapping their 401(k) for living expenses. By setting up a HECM line of credit, they accessed their home equity instead. This reduced their tax burden, preserved their retirement savings, and gave them flexibility for future estate planning.
Reverse Mortgage FAQs
It’s a loan that lets you access home equity without monthly payments. The loan is repaid when you sell, move, or pass away.
At least one borrower must be 62 or older.
As long as you pay property taxes, insurance, and maintain the home, you keep ownership and can stay as long as you want.
Amounts vary by age, home value, interest rates, and FHA limits. I calculate exact numbers for your situation.
Heirs can sell, refinance, or pay off the loan balance in cash to keep the home. FHA insurance ensures they never owe more than the home’s value.
They are regulated by HUD and FHA, require independent counseling, and include protections for borrowers and heirs.