Reverse Mortgage Types - What's Your Type?

Single Purpose, Proprietary or Federally Insured. Revealing the Reverse Mortgage Types, Better Informed is Better Armed

Do you live In the United States? If you do, you may not know the basic types of reverse mortgages that are available to home owners with equity in their homes. There are three reverse mortgage types of reverse mortgage home loans.

 Single Purpose Reverse Mortgage - Limited

 Proprietary Reverse Mortgage - Expensive

 Federally Insured Reverse Mortgage - Low Income

These are the types here in the US. In general you'll find these types or variations of them in many other countries as well. In the United Kingdom, a reverse mortgage is commonly selected as a lifetime mortgage. There is never any need for repayment as long as the owner remains in the home.

A reverse mortgage can be an excellent option for seniors over sixty two years old. This added income can help to support social security or other income deficits. The reverse mortgage is not required to be repaid until the owner of the home moves, sells the home, or in the event of death.

Reverse mortgage lenders will distribute the credit or loan all at once, in regular monthly payments or in some type of credit line. There are also variations and combinations banks are willing to arrange for the life of the loan.

Single Purpose Reverse Mortgage

A single purpose reverse mortgage is generally a low cost loan. These types of loans are not available in every city. The single purpose reverse mortgage is also used for very specific purposes like home improvements and repairs. It can also be used in the case of a shortage of property taxes. These types of loans come from government agencies and sometimes non profit organizations.

 Proprietary Reverse Mortgage

Proprietary reverse mortgages are owned or backed by private companies. These no doubt are the most expensive of the three types of reverse mortgages available. It is no wonder considering they are not backed by any government agencies or non profit organizations. Making money is the key reason why they are offered.

These types of loans work in the same manor as any Federally Insured reverse mortgage. 

 Federally Insured Reverse Mortgage

Federally insured reverse mortgages are backed by HUD (US Department of Housing and Urban Development). These types of loan appeal to low income families because there are no income or medical requirements.

A federally insured reverse mortgage is something to consider carefully as they tend to have a high cost if the owner doesn't stay for a long period of time. This is a common mistake made by many people due to the low monthly payment options.

A federally insured reverse mortgage is also referred to as a home equity conversion mortgage or HECM. It can become much more costly than a single purpose reverse mortgage, but can be used for any purpose. These types of loans are pretty wide spread and available in most cities within the US.

These are three reverse mortgage types for you to consider if you have the advantage. Remember to talk to a qualified person when you consider any type of financial decision regarding your home mortgage and which type of loan is right for you.