Types of Reverse Mortgages
Many seniors have discovered a solution to their financial difficulties by taking out a reverse mortgage. A reverse mortgage is when you borrow money against your home's equity, but you do not have to make any payments until the home is sold. Once the home is sold, the lender will get back the principal you borrowed plus interest for the time that the loan lasted. This can help elderly homeowners through tight financial situations and long-term care issues.
Reverse Mortgages can Help with Financial Difficulties
Before you decide to take out a reverse mortgage, you should know about the different types of reverse mortgages offered:
- The majority of reverse mortgages are Home Equity Conversion Mortgages. This type of loan is guaranteed by HUD and the Federal Housing authority, and may include a line of credit, which can appreciate, provide various payment options and a maximum loan limit that varies by location.
- The Homekeeper reverse mortgage from Fannie Mae also includes a maximum lending limit, but does not offer growing credit limits. This reverse mortgage is guaranteed by Fannie Mae, and often comes with lower closing costs than HUD reverse mortgages.
- The Private Cash account reverse mortgage is usually reserved for homes worth over $500,000. This type of reverse mortgage offers a growing credit line, flexible payment options, and often comes with higher closing costs.
Make sure you contact HUD and a financial advisor before you decide to take out a reverse mortgage. There may be other solutions available to you, and an advisor can help you to understand the pros and cons of a reverse mortgage.