LocalBusinessDaily

The first question someone may have when considering a reverse mortgage is, “what exactly is a reverse mortgage.”  In basic terms, a reverse mortgage is a financial tool that people can use in retirement to exchange the equity in their home for retirement income.  Often times seniors who have reached retirement age, find that their retirement funds are inadequate.  Fortunately this same generation thought it smart to pay off their home.  A reverse mortgage allows them to leverage this equity to their advantage during retirement.  If they kept their home until their dying day without any type of reverse mortgage, the home would pass on to their beneficiaries.  In the case of a reverse mortgage, the bank would provide them with a pre-determined monthly income that they would receive throughout their retirement.  When a specified period of time was up, typically upon the death of those who receive the payments, the home becomes fully owned by the bank.  If there is any portion of the home that was not paid out to the owners, those funds then go to the beneficiaries.

While this strategy is probably not the best one to plan for during your income earning years, it allows those who need extra help to stay in their home, receive this money as tax free income, and have no limitations as to how the money is spent.  The largest amount allowable for Utah reverse mortgages is six hundred and twenty five thousand dollars.

Another question asked is whether this income causes a reduction in Social Security or Medicare benefits.  The answer is not it does not.