Is A Reverse Mortgage Right For You?

There are regulations in order to qualify for a reverse mortgage. You must be at least 62 years of age and live in the home as your principal residence.

There are three basic types of reverse mortgages. These mortgages are single-purpose reverse mortgages, federally-insured reverse mortgages that are also known as Home Equity Conversion Mortgages or HECMs and proprietary reverse mortgages.

Single purpose reverse mortgages are offered by state and local government agencies as well as some non-profit organizations. One of the major advantages to this type of reverse mortgage is that it will not generally have high costs. Unfortunately, their availability is limited depending on where you live. In addition, there may be regulations specified by the lender regarding what you can use the proceeds of the loan for. The most common purposes include property taxes and home repairs and improvements. This type of loan may also have income restrictions; meaning you can’t make more than a certain amount of money in order to qualify.

A HECM will generally have higher cost than a single purpose mortgage and those costs are usually up front. On the flip side, they are more widely available and typically do not have income requirements. In addition, there are no purpose limitations. Because HECMs are backed by HUD you will be required to meet with a counselor from a housing counseling agency who will explain all the details regarding the loan to you. The amount of money you can borrow using a HECM will depend on your age, the value of your home, where you live and current interest rates. This type of loan can be quite flexible; providing options such as a line of credit as well as fixed monthly payments.

Because proprietary reverse mortgages are backed by private loan companies, the options with this type of loan can vary. Usually this type of loan will have a higher cost than a HECM.

Joe Kenny writes for the UK Loans Store where you will find information and reviews of the latest loans and offer more information on personal loans and other loan topics available on site.
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