Types of Reverse Home Loans


Single Purpose Reverse Home Loans

These loans are offered by some state and local government agencies and nonprofit organizations and are genially the least expensive option. They are not available everywhere and can be used for only one purpose, which is specified by the lender. For example, the lender can specify that the loan can only be used to pay for home repairs, improvements or property taxes.

Federally-Insured Reverse Home Loans

These loans are known as Home Equity Conversion Mortgages (HECMs) and are backed by the U.S. Department of Housing and Urban Development (HUD). This type of loan may be more expensive than traditional home loans, and the upfront costs can be high. These factors are important to consider, especially if you plan to stay in your home for just a short time or borrow a small amount. HECM loans are generally widely available and have no income or medical requirements and can be used for any purpose.

Proprietary Reverse Home Loans

Proprietary reverse mortgages are non-FHA insured private loans offered by private sector banks and mortgage companies and are not subject to the same regulations as HECMs. There are no limits on the fees or on the amount of money you can receive with this loan and these loans are sometimes referred to as “jumbo” reverse mortgages, because they are generally taken on higher-valued homes, generally $750,000 or more. This type of loan may also be more expensive than traditional home loans, and the upfront costs can be high. These factors are important to consider, especially if you plan to stay in your home for just a short time or borrow a small amount.

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