Are all reverse mortgages the same? Should I get a federally insured reverse mortgage? What if I want to change types of reverse mortgage at a later time?
While the premises for reverse mortgages are all the same there are different types of reverse mortgages available on the market. By regulation you must be at least 62 years of age, own your home or owe very little on your mortgage and the structure must be your primary residence. The differences that occur are whether or not you have a private reverse mortgage or a federally insured reverse mortgage through FHA/HUD. Private reverse mortgages may have different maintenance fees or interest rates. Federally insured reverse mortgages have set costs associated with them and the insurance policy protects your estate once you pass away.
Should I get a federally insured reverse mortgage?
If you are concerned that the sale of your home after you pass away may not cover the expenses incurred with your reverse mortgage you should apply for a federally insured reverse mortgage. This insurance policy guarantees the lender that if all the monies owed to the lender are not recovered from the sale of the home that the insurance policy will reimburse them. You are required to purchase this policy, but the cost can be rolled into the loan.
What if I want to change types of reverse mortgage at a later time?
If you want to change from a private reverse mortgage to a federally insured one you have that option if you pay off the amount due to the first lender. You are not required to stay with any specific loan if you pay off your debt to the original lender. Since this can be a difficult task you should consider all your options prior to applying for a loan.
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