If you own a home in Durango, Bayfield, Pagosa Springs, or anywhere across Southwest Colorado, there's a good chance your home has built significant equity over the years. For homeowners 62 and older, that equity can be a powerful retirement resource. A reverse mortgage is one way to access it, but it's not the right fit for everyone.
As Durango's only Certified Reverse Mortgage Specialist (CREV), I talk with seniors and their families about this topic regularly. Here are the questions I hear most often, answered as plainly as I can.
What exactly is a reverse mortgage?
With a traditional mortgage, you make monthly payments to a lender to pay down your loan. A reverse mortgage works the other way around. The lender provides funds to you, drawn from the equity you've built in your home. You can receive those funds as a lump sum, monthly payments, a line of credit, or a combination.
You don't make monthly mortgage payments as long as your home remains your primary residence and you stay current on property taxes, homeowners insurance, and basic property maintenance.
Who qualifies?
To be eligible for a HECM (Home Equity Conversion Mortgage), the most common type of reverse mortgage, you must be 62 or older, own your home or have a low remaining mortgage balance, and live in the home as your primary residence. Single-family homes, HUD-approved condominiums, and some manufactured homes can qualify.
What can the money be used for?
There are no restrictions. Common uses include eliminating an existing monthly mortgage payment, supplementing retirement income, covering healthcare expenses, funding home improvements, or simply having a financial safety net as you age in place.
Will I still own my home?
Yes. You retain title to your home. The lender does not take ownership. The loan becomes due when you sell the home, move out permanently, or pass away. At that point, the loan is typically repaid through the sale of the home. If the home sells for more than what's owed, the remaining equity goes to you or your heirs.
What are the costs?
Like any mortgage, a reverse mortgage has closing costs, an origination fee, and a mortgage insurance premium. Most of these can be rolled into the loan so there is nothing out of pocket at closing. I'll walk you through a full breakdown before you make any decision.
Is a reverse mortgage safe?
HECM reverse mortgages are federally insured through FHA. One important protection: you will never owe more than your home is worth when the loan becomes due, as long as you or a non-borrowing spouse are still living in the home.
Is it right for you?
That depends on your situation, your goals, and how long you plan to stay in your home. I won't push you toward a reverse mortgage if it's not the right fit. My goal is to educate you so you can make the best decision for yourself and your family.
If you're curious, the best first step is a free, no pressure conversation.
Call or text Ryan Champion at (970) 403-5677, or visit championmortgagepros.com/loan-programs/reverse-mortgages to learn more.
These materials are not from HUD or FHA and were not approved by HUD or any government agency.