Before making an important decision like giving up the equity in your home, you should get this question answered: “are all Reverse Mortgages alike?”
You’re eligible for a Reverse Mortgage now that you’ve turned 62 years old, but you still don’t know the answer to “are all Reverse Mortgages alike?” You’ve been paying on your home for 30 years and you now own it. Do you really want to give up the equity it’s taken so long to build up?
Are All Reverse Mortgages Alike?
The answer to “are all Reverse Mortgages alike?”, is no they are not. There are three different Reverse Mortgages: 1) single-purpose are funded by some state and local government agencies; 2) proprietary are privates loans backed by individual companies; and 3) federally-insured which are backed by the Department of Housing and Urban Development (HUD), and are also called Home Equity Conversion Mortgages (HECMs).
Which Type Of Reverse Mortgage Is The Least Expensive?
The single-purpose Reverse Mortgage is the least expensive type, but has specific restrictions about how you can spend the money. Also, this Reverse Mortgage is not available in every state.
Proprietary and HECMs
These two types are more expensive, but you can use the money any way you want. The HECMs require that you meet with a counselor approved by HUD to see if you have any alternatives other than this type, and you also have to meet their requirements.
Benefits of a Reverse Mortgage
You can take the money in a lump sum or monthly payments. There are no taxes on your Reverse Mortgage, and the loan doesn’t have to be repaid until you move or die. You will never owe more than your home’s value. This means that if your home is sold for more than the value, your heirs will receive the balance.
Which Type Should I Choose?
Now that the question “are all Reverse Mortgages alike?” has been answered, you have to decide which of the three is best for you. If you have a low or moderate income you can qualify for the least expensive one, the single-purpose. So, if that one is available in your state, that would be the one to choose.
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