Types of Reverse Mortgage Available | Mortgage

By IgorBuces
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Reverse home mortgages aid seniors over 62 take advantage of the equity in their homes that has been created over the time they have been in the home. It can help seniors because it can be used as a type of second mortgage. In a reverse mortgage, the owner doesn't ever need to pay back the loan for as long as the owner stays living in the house. It basically works as a loan on the present equity.

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.

There are basically three different types of reverse mortgages that owners can apply for: a single purpose reverse home mortgage, a federally backed reverse mortgage or a privately issued reverse mortgage.

Single Purpose Reverse Home Loan

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 US Department of Housing and Urban Development (HUD) backs this reverse home mortgage. This type of reverse mortgage is also known as a HECM (Home Equity Conversion Mortgage.) It's a little more expensive than the single purpose reverse mortgage.

The biggest difference is that you can use the money for whatever reason you want. It is also an easier loan to qualify for and it's available all over the country. This type of reverse mortgage is by far the most popular of the three.

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 drawback is its cost. Since it doesn't need to comply with federal regulations, companies can get away with charging to much money to unsuspected senior citizens.

About the Author

To find additional information about how a senior reverse mortgage works, go to our website. In it you'll find expert advice on anything having to do with a reverse mortgage

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