Basically the reverse mortgage income is a derivative of home’s equity by lender. The lender isn’t reimbursed till the property or house is sold. Today in the market there are three different types of reverse mortgage namely single purpose, home equity conversion and proprietary reverse mortgages.
Single Purpose Reverse Mortgage
This type of mortgage is provided by non profit businesses, local and state government agencies. These loans usually have lower costs, but aren’t available all over the world. Here the borrower needs to pay low or moderate income and satisfy specific needs related to home improvement, health expenses and property tax.
Home Equity Conversion Mortgages
The second type of reverse mortgages loan is referred to as Home Equity Conversion Mortgages or HECM. This type of mortgage is backed up by the United States of America through the Department of Housing & Urban Development. In this case one should meet a counselor who doesn’t belong to any government agency or is approved by the housing counseling agency. If you are planning to stay in a home for a short period of time, then these types of loans will be expensive. But these loans are available for every one and there are no medical or income requirements.
Proprietary Reverse mortgages
Proprietary reverse mortgage is the third one among the reverse mortgages. This private loan is backed by companies that develop them. Like all the other reverse mortgage programs here also one must live in his own home and these loans are tax free. This mortgage doesn’t affect Medicare benefits or social security of an individual.
But it is better for an individual, before opting for any kind of reverse mortgage loans, to consult and seek advice from a financial adviser. With the reverse finances one can live in his own house, retain title without having to pay back the loan till the last living borrower sells the home or dies or no longer lives in his primary residence.
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