If you’ve ever had a traditional mortgage, you’re probably familiar with the term “maturity date.” It’s the scheduled day when the final loan payment is due, bringing your mortgage to an official close.

But reverse mortgages don’t work that way.

Instead of a maturity date, reverse mortgages operate based on something called a “maturity event”. Understanding the difference can help homeowners and their families feel more confident and prepared.

What’s a Maturity Event?

With a conventional mortgage, you make monthly payments until the loan is fully paid off. You know exactly when that will happen, on the maturity date. But with a reverse mortgage, borrowers don’t make monthly payments. Instead, the loan becomes due only when a specific event occurs in the future. That’s the “maturity event.”

In short, a maturity event is a life event that triggers repayment of the reverse mortgage. There’s no set calendar date; the loan is open-ended and tied to the homeowner’s living situation.

Common Maturity Events

The most common maturity events that end a reverse mortgage loan include:

• The home is no longer the borrower’s primary residence (such as moving to a different home or into long-term care).

• The property is sold or transferred out of the borrower’s name.

• The last remaining borrower passes away.

• The borrower moves out for 12 consecutive months or longer (for example, to an assisted living facility).

• The homeowner fails to meet loan obligations, such as falling behind on property taxes, homeowners insurance, or HOA fees.

When any of these events occur, the reverse mortgage becomes due and payable. At that time, the loan is typically repaid by selling the home, refinancing, or using other available funds.

For many seniors, the appeal of a reverse mortgage lies in the ability to stay in their home without the burden of monthly mortgage payments. Knowing that repayment is only triggered by a significant life change, and not a scheduled date, can provide peace of mind.

It’s important to remember that while reverse mortgages don’t require regular payments, homeowners are still responsible for maintaining the home, paying property taxes, and keeping up with homeowners insurance. These ongoing responsibilities help keep the loan in good standing and prevent early maturity.

Reverse mortgages are available to homeowners age 62 or older. They allow borrowers to convert a portion of their home equity into usable funds, either through a lump sum, monthly payments, a line of credit, or even to help purchase a new home.

The loan is backed by the Federal Housing Administration (FHA), and borrowers retain ownership of their home as long as they meet the program requirements.

Jan and Kelsey are Reverse Mortgage Specialists serving the Erie, Dacono, Fort Collins, Loveland, Greeley, Longmont, Boulder and other Front Range areas of Colorado, as well as the Cheyenne and Laramie communities of Wyoming.  Contact Jan and Kelsey to learn if a reverse mortgage is right for you.