Reverse Mortgage Basics for Northern Colorado Homeowners

Over the last few years, more of my longtime clients have asked me about reverse mortgages. Many have lived in the same Fort Collins or Loveland home for decades, and their home is now their biggest asset. Here's a plain-English look at how it works.

It's a loan

A reverse mortgage, most often an FHA-insured Home Equity Conversion Mortgage (HECM), is a loan secured by your home for borrowers 62 and older. Instead of making a monthly mortgage payment to a lender, interest and fees are added to your loan balance. That balance grows over time and your home equity decreases.

What you still have to do

There's no required monthly mortgage payment, but you must live in the home as your primary residence, pay property taxes, homeowners insurance and any HOA dues, and keep the home in good repair. The loan becomes due when the last borrower sells, permanently moves out or passes away.

Counseling comes first

Before you apply, you'll meet with an independent HUD-approved counselor. A financial assessment also applies. I always encourage clients to bring an adult child or trusted advisor along to both conversations.

Is it right for you?

It can make sense if you want to stay in your home, pay off an existing mortgage, or add flexibility to retirement income. It may not make sense if you plan to move soon or want to leave as much equity as possible to heirs. HECM limits are set by FHA and updated annually, so I'll review your real numbers with you.