Utah Reverse Mortgage Guide

In Utah, homeowners aged 62 or above have access to a financial tool that may help to enhance their retirement portfolios.

As retirement approaches, finding methods to improve cash flow, fund home upgrades, clear consumer debts, or supplement retirement savings becomes paramount.

One such solution is a reverse mortgage. Reverse mortgages are federally insured loans that offer eligible homeowners an opportunity to tap into their home equity without the necessity of monthly mortgage payments.

This guide to reverse mortgages in Utah is designed to guide you through the intricacies of reverse mortgages, including their types, eligibility criteria, borrower rights, and the process required to secure one.

What is a Reverse Mortgage?

A reverse mortgage is a unique financial solution for older homeowners, allowing them to utilize their home’s equity as a borrowing tool.

The most common type of reverse mortgage, known as the Home Equity Conversion Mortgage (HECM), comes with backing from the federal government through the Federal Housing Administration (FHA) and the U.S. Department of Housing and Urban Development (HUD).

It’s a specialized loan that offers numerous disbursement options including a one-time lump sum payment, equal monthly payments, a line of credit, or a combination of those methods.

Unlike conventional mortgages, home equity loans, or home equity lines of credit (HELOCs) that require regular monthly payments, reverse mortgages do not require borrowers to make any monthly mortgage payments. Homeowners must continue to cover property tax payments, homeowner’s insurance, home maintenance costs, and any mandated fees such as HOA dues.

The repayment of a reverse mortgage occurs when the home is sold, ceases to be the primary residence of the home, or when the last remaining borrower passes away.

Reverse Mortgage Requirements

To be eligible for a reverse mortgage loan in Utah, you need to meet several criteria. Here’s a breakdown of what you need to know:

Age. At least one homeowner must be 62 years old or older.
Residency. The property must be your primary residence.
Equity. You need to have equity in your home.
Home Condition. Your home should be in good condition.
Ongoing Costs. You must be able to continue covering costs such as property taxes, homeowner’s insurance, HOA fees (if applicable), and home maintenance.
Property Eligibility. The property must be eligible for a reverse mortgage. This includes single-family homes, two-to-four-unit properties (with the homeowner occupying one unit), FHA-approved condominiums, and approved manufactured homes.
Counseling Session. A counseling session with a HUD-approved third-party counselor is mandatory for prospective borrowers. This ensures you fully understand the process and implications of a reverse mortgage.

Benefits of a Reverse Mortgage

Reverse mortgages can offer several benefits for eligible homeowners, including:

Supplemental Income. A reverse mortgage can provide additional income to support your retirement or cover unexpected expenses.
No Monthly Payments. As mentioned earlier, reverse mortgages do not require monthly payments, providing financial relief and flexibility. Homeowners must continue to pay property taxes, insurance, and maintain the home.
Retire in Place. A reverse mortgage provides a way for homeowners to be able to afford to remain in the home and community where they have built their lives.
Upsize or downsize. For those who want to relocate for retirement, this option may become more affordable with a reverse mortgage for purchase.
Tax-Free Income. The money received from a reverse mortgage is considered tax-free. This is because the reverse mortgage proceeds are a loan, and therefore they are not considered income.
Flexible Disbursement Options. Borrowers have the option to receive their funds in a variety of ways, including lump sum, line of credit, monthly payments, or a combination of these methods.
No Prepayment Penalty. There are no penalties for paying off a reverse mortgage early, giving borrowers the flexibility to do so if their financial situation changes.

Reverse Mortgage Types in Utah

In Utah, potential borrowers have access to four distinct types of reverse mortgages, each catering to varying needs and situations:

Home Equity Conversion Mortgage (HECM)

Specifically designed for borrowers aged 62 and older, the HECM reverse mortgage offers considerable flexibility with no usage rules. It does, however, adhere to a lending limit set by the FHA. As of 2024, the FHA lending limit is $1,149,825.

Jumbo Reverse Mortgage

For homeowners seeking to borrow beyond the FHA’s lending limit of $1,149,825, jumbo reverse mortgages are proprietary reverse mortgages offered by each lender. At Mutual of Omaha Mortgage, our HomeSafe Reverse Mortgage is the jumbo reverse mortgage that we offer. In the state of Utah, homeowners are allowed to obtain a proprietary reverse mortgage at the age of 55.

HECM for Purchase

The Home Equity Conversion Mortgage for Purchase (HECM for Purchase) is an innovative financial approach, allowing homeowners to finance a portion of their new home using a reverse mortgage. This strategy combines a reverse mortgage with a substantial down payment, usually from the sale of a previous property, enabling retirees to upsize or downsize their homes without monthly payments. Just like with a traditional HECM reverse mortgage, borrowers are still required to pay property taxes, insurance, and maintain the home.

Single-Purpose Reverse Mortgage

Although less common, the single-purpose reverse mortgage is another reverse mortgage for homeowners aged 62 and older. Unlike its counterparts, these mortgages are restricted to a specific purpose outlined by the lender, often home improvement projects.

Utah Reverse Mortgage Protections

One of the upsides to a reverse mortgage is that it comes with several protections for borrowers, including the following:

Mandatory Counseling

All potential reverse mortgage borrowers are required to undergo a counseling session with a HUD-approved counselor. The purpose of this counseling session is to ensure that the borrower understands how a reverse mortgage works, the implications, and potential alternatives to a reverse mortgage. This process is aimed at ensuring that the decision to proceed with a reverse mortgage is made in the borrowers’ best interests and is not influenced by any person who may have a vested financial interest in the transaction.

Right to Rescind

The right to cancel is inherently provided to all reverse mortgage applicants. This means that at any given point, including within three business days after signing the closing loan documents, applicants reserve the right to rescind their application. This is also why there is a three-day waiting period before homeowners may start receiving their reverse mortgage funds.

Non-Recourse Loan Protection

A reverse mortgage is classified as a non-recourse loan. When it comes time to settle the loan, borrowers are required to repay only up to the loan balance or the home’s value, whichever is less.

Spousal Protections

In cases where only one spouse is listed on the reverse mortgage, provisions are in place to protect non-borrowing spouses from foreclosure or eviction. This protection extends even after the borrowing spouse passes away, provided that the non-borrowing spouse continues to fulfill their end of the loan agreement.

Utah Reverse Mortgage Loan Calculator

The amount of money you will be able to borrow is calculated based on the age of the youngest borrower, the current market value of the home, and current interest rates.

To receive an estimate of how much you might be able to receive, use our Reverse Mortgage Loan Calculator.

Note: The number provided by the calculator is only an estimate. To receive more precise numbers, talk to one of our experienced loan officers.

Reverse Mortgage Loan Application Process in Utah

The reverse mortgage loan application process in Utah is comprehensive and designed to ensure the best outcome for the borrower:

Step 1: Consultation

It starts with an initial consultation, where potential borrowers meet with a loan officer to discuss their options and understand the implications of a reverse mortgage. The loan officer can typically provide preliminary information about whether you meet the qualifications as well as provide an estimate of what you may expect to receive.

Step 2: Counseling

Next is the counseling session, conducted by an independent HUD-approved counselor who ensures that the borrower comprehends the terms and conditions of the loan. The counseling session is a required step by HUD and is meant to protect the interests of the borrower.

Step 3: Submit the Application

After the counseling is complete, the application is formally submitted. The loan officer will collect all necessary documents, including proof of residence, income verification, and a statement of assets and liabilities.

Step 4: Home Appraisal and Credit Assessment

Upon receiving your application, our team at Mutual of Omaha Mortgage will order an appraisal of your home. This valuation aims to assess the home’s current market value and overall condition, which are crucial factors in determining the amount you can borrow. We will also order a title and credit report. This comprehensive assessment generally takes between one to two weeks to finalize.

Step 5: Underwriting

Upon the submission of the application along with requisite documentation, the process of manual underwriting is initiated. During this phase, the underwriter takes the responsibility of ensuring all the stipulations for the reverse mortgage are fulfilled and makes the crucial decision of loan approval. It may be necessary for them to request further documentation or request specific home repairs before they can finalize the loan agreement. Your dedicated reverse mortgage loan advisor will provide timely updates regarding any actions that need to be taken.

Step 6: Closing

Upon successful approval of the application, a convenient date will be arranged for signing the closing loan documents. You will be offered two flexible options for signing the closing documents. You can choose to sign the documents at the comfort of your home, aided by a mobile notary service. Alternatively, you may opt to sign the loan documents in person at the title company.

Step 7: Receive Funds

After signing your closing documents, a compulsory three-business-day waiting period is observed before the disbursing funds. Once this period has passed, your funds will be disbursed according to the method(s) you specified during the application process.

Find a Utah Reverse Mortgage Loan Officer in Your Area

Mutual of Omaha Mortgage is a licensed Reverse Mortgage lender in the state of Utah. You can get started by calling 800-578-0283 or filling out this form here.

You can also find a Utah Reverse Mortgage loan officer in your area through our loan officer directory or by clicking on one of the links below to find a loan officer near you:

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