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Types of Reverse Mortgages

There are actually three different types of reverse mortgages: they are called the single-purpose, the federally-insured and the proprietary reverse mortgage. The single-purpose reverse mortgage is offered to people by either government agencies that are located in your state or by some type of nonprofit organizations. These may not be offered in every location but in places they are available, they normally have a low cost rate. You may qualify for this loan if you have a low income but it is only available for one purpose that must be specified by the lender.

Home Equity Conversion Mortgages or HECMs for short, are federally-insured reverse mortgages. These loans are considered a private loan and are handled by the companies that create and present them to potential clients. They may cost more in the beginning; therefore they are not good for a short-term loan. However, you can use these loans for whatever you like and they have no special requirements. They are also more available to homeowners than a single-purpose reverse mortgage.

If you are looking into a proprietary reverse mortgage, then there are several things that must be considered. For example, your age is a factor along with the value of your home. The location of your home and the current interest rates are also a factor with this mortgage. All of these things affect how much money you can borrow with this loan.

Make sure that you gather all the information available before you enter into a reverse mortgage contract and finalize the deal. If you have any questions or concerns that have not been dealt with, postpone the agreement until you are completely satisfied.