A reverse mortgage can be a great way to get cash from the equity in your home.
Most homeowners don't realize there are three different types of reverse mortgages. It's important to know about all of them before you decide which is right for you.
With a variety of reverse mortgages available, it can be tough to figure out which one is right for you. Do you want a loan that can only be used for a specific purpose? Or do you want the flexibility of a HECM or proprietary mortgage?
Reverse Oxygen has all the information you need to make an informed decision about getting a reverse mortgage. We'll help you compare the three different types and find the best option for your needs.
In this post, we will talk about the three types of reverse mortgages so you can make sure you're feeling confident about your options moving forward.
1. Single-Purpose Reverse Mortgage
This type of reverse mortgage is typically offered by state and local governments or nonprofit organizations to people with low incomes.
The amount that they'll lend you isn't very big, it can only be used for one purpose upfront (hence the name), which means these funds are essential in nature - especially since most don't come with extensive borrowing capabilities like other types do.
But when we think about what's important during financial recovery period after an emergency occurs such as property tax payments/home repairs & homeowners' insurance...well now there seems even MORE reason why our clients should consider taking out a single-purpose Reverse Mortgage!
2. Home Equity Conversion Mortgage (HECM)
This is the type of reverse mortgage that you'll find most often, and it has some major benefits! It can be used for anything because your lender makes sure to fully insures them against any disaster-in case they go bankrupt.
Should that happen, all money received goes toward paying off what's owed on their loan instead. There are federal limits though so make sure not to exceed those numbers before taking out this kind of financing plan.
There is a limit on how much one may borrow with a HECM however compared to other single-purpose loan programs like personal lines ones which have no total dollar amount limitations at all.
3. Proprietary Reverse Mortgage
Here's how a proprietary reverse mortgage works. You get more power and less federal oversight. Still, you have to be aware that there are some risks involved with this type of loan because it isn't as well regulated by the government or other entities like credit unions which might make them harder for consumers in your shoes.
This means that those without good enough finances already who want access beyond what their bank will offer to obtain one.
The proprietary reverse mortgage is a private-company-based alternative that offers you the opportunity to borrow more money without those pesky federal limits. However, these types tend not be available or easy for everyone due in part because they're niche products which means it can take some digging around on your end before finding out about them!
What Is Right For You?
You now know about the three types of reverse mortgages.
Which one is right for you?
That’s a question only you can answer, but we’re here to help. Schedule a complimentary consultation with one of our specialists and they will walk you through the process step-by-step.
We want to make sure that you have all the information you need to make an informed decision about your financial future.
