Reverse mortgages are a type of loan that allows people who are 62 years or older to access the equity they have built in their homes. There are three types of reverse mortgages: single-purpose reverse mortgages, federally-insured reverse mortgages, and proprietary reverse mortgages.
BENEFITS OF REFINANCING YOUR HOME:
- Single-purpose reverse mortgages are offered by some state and local government agencies and non-profit organizations. They are typically the least expensive option, but they can only be used for one specific purpose, such as home repairs or property taxes.
- Federally-insured reverse mortgages, also known as Home Equity Conversion Mortgages (HECMs), are backed by the U.S. Department of Housing and Urban Development (HUD). They offer more flexibility than single-purpose reverse mortgages and can be used for any purpose. However, they also tend to be more expensive than other types of reverse mortgages.
- Proprietary reverse mortgages are offered by private lenders and are not insured by the government. They are designed for people with high-value homes and can offer larger loan amounts than other types of reverse mortgages. However, they also tend to have higher interest rates and fees.