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Types of Reverse Mortgage Available
The homeowner can never be thrown out of the home for lack of payment since there is no money to pay back. It is a good type of loan for seniors with a decreasing income but who would like to stay in the homes they have had for a long time The owner can choose to access the money in one of three ways: a credit line, a one-time payment or a regular monthly payment.
As a senior citizen, you can choose among one of three types of reverse home mortgages: a single purpose reverse home loan, a federally backed reverse home mortgage or a privately issued reverse mortgage.
Single Purpose Reverse Home Loan
This type of reverse mortgages is offered by some Government organizations and non-profit agencies. It's the cheapest of the reverse mortgage available. However, there are more hurdles to go over to qualify for this loan. The owner must be in the lower income bracket and the home loan must be used for a specific pre-approved purpose (home improvements, repairs or to pay real estate taxes.)
Federally Backed Reverse Mortgage
The U.S. Department of Housing and Urban Development (HUD) backs this reverse mortgage. It is also know as a HECM (Home Equity Conversion Mortgage.) It is a more expensive loan than the previous one.
This type of reverse mortgage is by far the most common of the three. It accounts for over 90% of all reverse mortgages. It's very popular because it's very easy to apply to and qualify for. In addition, you can use the money from the loan far whatever reason you want.
Private Reverse Mortgage
This type of mortgage is provided by a private company who hasn't been approved to issue a Federally Insured Reverse Mortgage. In general, they have the same type of requirements than a regular reverse mortgage.
The biggest problem with this type of loan is that it can be very expensive. Since private companies offering this type of loan do not need to comply with federal regulations, some companies take advantage of it by charging excessive fees to unsuspected seniors.
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To find more information about how a senior reverse mortgage works, go to our website. In it you'll find professional advice on everything having to do with a reverse mortgage
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