How do Reverse Mortgages work?

Have you ever asked, How do Reverse Mortgages work?

Sometimes we take for granted that for us something might be simple and easy to understand but horribly complex and confusing for someone else. For example, knee surgery to a surgeon is just another day at the office and computer programming for a 12-year-old is just a break after school. But for me, the thought of doing these things would be my proverbial nightmare.

I specialize in HECM Reverse Mortgages and occasionally I forget that trying to understand Reverse Mortgages could be someone else’s nightmare. That’s why I’m always looking for new and simpler ways to help people understand the mechanics of a HECM Reverse Mortgage.

I’ve found that the easiest way to explain a Reverse Mortgage is to compare it to a conventional mortgage since most adults have had a mortgage at some point in their life. So let’s highlight the differences between the two:

Conventional Mortgage – With a standard mortgage you go to the bank and borrow money to buy a home. You agree with the bank that for the next 15 or 30 years you?ll make monthly payments which will:

  • Pay part of your property taxes and insurance
  • A little of your principal balance
  • Any interest that accrued over the past 30 days.

HECM Reverse Mortgage – How does a Reverse Mortgage differ? The only real difference with a Reverse Mortgage is that payments are optional. This means that for the homeowner:

  • They’ll pay their taxes, insurance, and other basic property expenses on their own
  • The principal or money borrowed from the bank is repaid down the road when the homeowner sells the home or passes away.
  • The interest still accrues monthly but interest is added to the balance of the mortgage and likewise repaid when the homeowner passes away or sells the home.

Why is this good?

For someone with a Reverse Mortgage, they have the option to choose whether or not to make a monthly payment. That means that from day one, they can either choose to never make another payment on their mortgage as long as they live in the home, or they can pick and choose to make payments when they wish. Likewise, if they set their Reverse Mortgage up as a growth line of credit any payments they make on their mortgage can be withdrawn in the future with interest.

If you’re mystified by the mechanics of how Reverse Mortgages work please call me and let me clarify this amazing product for you so you understand how it could change your life.

Trevor Carlson

President – Reverse Mortgage Specialist

Heritage Reverse Mortgage


Heritage NMLS #1497455 Trevor?s NMLS #: 267962

1060 South Main Street Bldg. A Suite 101B

St George Utah 84770

P.S. We’re excited to announce that we are now licensed in Nevada. Our office is located in Southern Utah but we can now serve borrowers in Utah, Colorado and Nevada.