The Most Common Types of Reverse Mortgages |
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| Written by Igor Buces | ||||||
| Tuesday, 22 July 2008 | ||||||
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Seniors over 62 can take advantage of the equity they have build in their home by applying for a reverse mortgage. A reverse home loan can help seniors because it works as a loan advance. With this type of loan, the owner doesn't need to make monthly payments back to the bank and doesn't need to pay back any of the money for as long as the owner lives in the property. The homeowner can never be thrown out of the home for lack of payment since there is no money to pay back. It is a good type of loan for seniors with a decreasing income but who would like to stay in the homes they have had for a long time The owner can choose to access the money in one of three ways: a credit line, a one-time payment or a regular monthly payment. As a senior citizen, you can choose among one of three types of reverse home mortgages: a single purpose reverse home loan, a federally backed reverse home mortgage or a privately issued reverse mortgage. Single Purpose Reverse Home Mortgage This type of reverse mortgages is offered by some Government organizations and non-profit agencies. It's the cheapest of the reverse mortgage available. However, there are more hurdles to go over to qualify for this loan. The owner must be in the lower income bracket and the home loan must be used for a specific pre-approved purpose (home improvements, repairs or to pay real estate taxes.) Federally Insured Reverse Mortgage The U.S. Department of Housing and Urban Development (HUD) backs this reverse mortgage. It is also know as a HECM (Home Equity Conversion Mortgage.) It is a more expensive loan than the previous one. The biggest plus of this loan is that you can use the proceeds from it for any purpose you want. It is also easier to get and it's available to homeowners all over the country. This kind of reverse home loan is by far the most common. Private Reverse Mortgage This kind of reverse home loan is available through private companies that haven't been HUD certified. They usually have the same requirements than a federally insured one. The biggest problem with this type of loan is that it can be very expensive. Since private companies offering this type of loan do not need to comply with federal regulations, some companies take advantage of it by charging excessive fees to unsuspected seniors.
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To learn more articles about how a senior reverse mortgage works, visit our website. In it you'll learn professional counsel on anything having to do with a reverse mortgage
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| Last Updated ( Saturday, 21 August 2010 ) | ||||||
