This article will help you decide which reverse mortgage product is best for you.
Before taking out a reverse mortgage product, you want to know which one will cost you the least. In order to get the question to that answered, you need to understand the difference between the different types or reverse mortgage products. Below is a brief explanation of the different types of reverse mortgages one can get.
Single Purpose Reverse Mortgages
Single Purpose reverse mortgages are offered by nonprofit organizations, and some state and local government agencies. These loans are not offered everywhere and can only be used for a specific purpose. The lender lets you know what the money can be used toward. Usually people with low or middle income can qualify for these loans.
Federally Insured Reverse Mortgages
Federally insured reverse mortgages are also known as Home Equity Conversion Mortgages (abbreviated HECMs). These mortgages are funded by the United States Department of Housing and Urban Development or HUD. These loans are available to anyone, with no medical or income requirements.
Proprietary Reverse Mortgages
The proprietary reverse mortgages are loans that are backed by private companies. Like federally insured reverse mortgages, there are no medical or income requirements. These loans are also widely available.
The Cheapest Reverse Mortgage
After knowing what each reverse mortgage is, the answer to the product that will cost the least amount of money is the single purpose reverse mortgages. These mortgages are usually used for home repairs, home improvements projects, or to pay property tax. Although these loans are the cheapest reverse mortgages out there, they may not be the right one for you. For instance, if you do not need the money solely for one purpose, than these mortgages won’t be a good idea. Just remember whatever reverse mortgage you choose to go with you should understand it completely before signing on.
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