Reverse Mortgages

Reverse Mortgages

A reverse mortgage is a type of loan that allows homeowners over the age of 62 to convert the equity in their homes into cash. With a reverse mortgage, the borrower does not have to make monthly payments to the lender. Instead, the loan is repaid when the borrower sells the home, moves out permanently, or passes away.

Reverse mortgages can be an attractive option for homeowners in Utah who are retired or on fixed incomes and need additional financial resources to cover expenses such as healthcare, home repairs, or daily living expenses. However, it is important to carefully consider all the pros and cons before taking out a reverse mortgage.

Eligibility for Reverse Mortgages

To be eligible for a reverse mortgage in Utah, homeowners must meet the following requirements:

  • Be at least 62 years old
  • Own the property outright or have a low mortgage balance that can be paid off with the proceeds from the reverse mortgage
  • Occupy the property as their primary residence

It is also important to note that reverse mortgages are only available on single-family homes, multi-family homes with no more than four units, and certain types of condominiums and manufactured homes.

How Reverse Mortgages Work 

There are several types of reverse mortgages available in Utah, including the Home Equity Conversion Mortgage (HECM), which is insured by the Federal Housing Administration (FHA). With a HECM, the borrower has the option to receive the loan proceeds in the form of a lump sum, a line of credit, or monthly payments.

The amount of money a borrower is eligible to receive from a reverse mortgage is based on several factors, including the borrower's age, the value of the home, and the current interest rates. The older the borrower is, the more money they may be able to receive. However, it is important to keep in mind that taking out a reverse mortgage will reduce the equity in the home.

It is also important to note that a reverse mortgage is a non-recourse loan, which means that the borrower (or their estate) will never owe more than the value of the home when the loan becomes due. If the borrower sells the home for less than the amount owed on the loan, the lender cannot seek additional payment from the borrower or their estate.

Costs and Fees Associated with Reverse Mortgages in Utah

Like any loan, reverse mortgages in Utah come with costs and fees that the borrower will need to pay. These may include:

  • Origination fees
  • Mortgage insurance premiums
  • Closing costs
  • Servicing fees
  • Counseling fees

It is important to carefully review all of the costs and fees associated with a reverse mortgage before making a decision. Borrowers may want to consider comparing offers from multiple lenders to ensure they are getting the best deal.

Pros and Cons of Reverse Mortgages

There are both potential benefits and drawbacks to taking out a reverse mortgage in Utah. Some of the potential benefits include:

  • Providing additional financial resources for retirement or other expenses
  • Allowing homeowners to stay in their homes and age in place
  • Offering a way for homeowners to access the equity in their homes without having to sell or take out a traditional mortgage

However, it is important to carefully consider the potential drawbacks of a reverse mortgage as well, including:

  • Reducing the equity in the home
  • Potentially resulting in a higher cost of borrowing compared to other options
  • Complicated terms and conditions that may be difficult to understand


Borrowers should carefully weigh the pros and cons of a reverse mortgage before making a decision. Reverse mortgage loan advances are not taxable, and generally do not affect Social Security or Medicare benefits. You retain the title to your home and do not have to make monthly repayments. The loan must be repaid when the last surviving borrower dies, sells the home, or no longer lives in the home as a principal residence. In the HECM program, a borrower can live in a nursing home or other medical facility for up to 12 months before the loan becomes due and payable.

Let's talk today! Speak with a licensed loan officer who can answer all of your reverse mortgage questions.