A proprietary reverse mortgage is different from other loans or reverse mortgages because these loans are given by private organizations.
What Makes a Proprietary Reverse Mortgage so Different?
What makes propriety reverse mortgages so different is that there is no government involvement. There are many various kinds of reverse mortgages available due to the many privately owned corporations. In addition, each state has different requirements so before applying for this kind of loan, check out your state’s requirements.
Repaying the Proprietary Reverse Mortgage
A proprietary reverse mortgage is a different kind of home loan in that it allows you to take a portion of the equity you have in your home and turn that portion into cash. But, a proprietary reverse mortgage is different in that you don’t have to repay the loan until you, the borrower, no longer use the home as your main residence.
How to Qualify
To qualify for a proprietary reverse mortgage one must be 62 and have most or all of your home mortgage paid off. No medical tests or medical history of the borrower are needed to qualify. In addition, you may also have to enroll in a free mortgage counseling session. The amount you are allowed to borrow depends on several factors such as your age, the value of your home, the equity in your home and the interest rate. Payment is given in monthly advances, by credit or in one lump sum.
Positive Offerings
Because of the positive offerings of proprietary reverse mortgages, many these days are considering the option. However, there are several disadvantages that come with a proprietary reverse mortgage such as: they cost more, there may be interest increases, some of all of your equity in a loan is used, there are closing costs and origination fees, and servicing fees where the homeowner, remains responsible for such items as insurance, fuel, taxes, maintenance, and other related expenses.
What Are the Ramifications of Not Fulfilling the Agreement
It is also important to know and understand the ramifications of the proprietary reverse mortgage. If the borrower does not fulfill his or her duties and obligations under the reverse mortgage terms, the mortgage in most cases, will become due immediately. Such neglect such as not keeping one’s home insured, or neglect in maintaining the utilities, or failing to pay one’s taxes, or neglecting to maintain the home properly are examples of could lead to the mortgage being paid in full, in a short and timely manner.
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