Is a HECM reverse mortgage different? Is a HECM reverse mortgage better than a from a private lender? Can I have a HECM and private reverse mortgage?
A HECM reverse mortgage is a reverse mortgage that is federally insured and issued by the FHA/HUD. HECM stands for Home Equity Conversion Mortgage and is very much like any other type of reverse mortgage except that it has an insurance policy that protects the lender and your estate. The lender sells your home after your death to regain the money that you have taken from the equity. In the event that the sale of the home does not cover the amount owed the HECM insurance policy will pay the lender the amount left owing. Without this type of policy the balance due would fall upon the estate.
Is a HECM reverse mortgage better than one from a private lender?
Each type of reverse mortgage has its good and bad points. With a private lender you will probably have lower maintenance fees on the mortgage as well as not having an insurance premium attached to the loan. If, after your death, your home sale does not cover the amount due your heirs will be responsible for the debt. With a federally insured reverse mortgage your estate will not be responsible for any outstanding debt from this mortgage, but you will have higher fees and costs associated with the loan.
Can I have a HECM and a private reverse mortgage at the same time?
You can only have one reverse mortgage, either private or insured. Once you have placed a reverse mortgage upon your house this information is recorded and any attempt to get a second reverse mortgage would be stopped. Because a reverse mortgage is based on the equity of your primary residence you can only have one loan.
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