Types of Reverse Mortgage Programs

A reverse mortgage gives senior citizens the opportunity to cash in on the equity they have in their homes. There are three main types of reverse mortgage programs:

  • Single-purpose reverse mortgages are offered by government agencies and non-profits. They are not available in all locations. A single-purpose reverse mortgage is generally only available to those with low income. These feature the lowest costs of all reverse mortgage types. However, they can only be used for one purpose, and that purpose is specified by the lender. These are commonly used for home repairs or to pay property taxes.

  • Home Equity Conversion Mortgages (HECMs) are federally insured reverse mortgages that are backed by the U.S. Department of Housing and Urban Development (HUD). They have higher costs than the single-purpose reverse mortgage, but are much more flexible. The money can be used in any way you choose, and you can receive the funds as monthly payments, a line of credit, or a combination of the two.

  • Proprietary reverse mortgages are private loans backed by a company. These offer costs and flexibility similar to HECMs, but can potentially get you more money, especially if your home has a high value.

The type of reverse mortgage you should seek depends on a number of factors. You will need to consider what you plan to use the proceeds for, how you want them distributed, and how much money you need.

If you are going to use the mortgage for something that a single-purpose reverse mortgage would allow, it may be your best option. Keep in mind, however, that in order to qualify you must have low to moderate income. They also may or may not be available in your area. If they arenít, you will have to consider other options.

If your home has high value and you have a large amount of equity in it, you could get more money from a proprietary reverse mortgage. The mortgage provider can give you the details on how much you could potentially borrow. This type of reverse mortgage also allows flexibility that the single-purpose type does not, so it is good if you need monthly payments to help make ends meet or wish to purchase something that is not allowed with a single-purpose loan.

HECMs generally offer lower interest than proprietary reverse mortgages, and they offer the same flexibility in regards to how the proceeds are distributed and how you may use them. But there are limits to how much you may borrow with a HECM. If you have high equity and need to borrow a lot of money, a proprietary reverse mortgage may be better.

A reverse mortgage can help with numerous financial problems, allow you to go on vacation, or help you buy something you need but otherwise could not afford. Each type of reverse mortgage offers different benefits and limitations. It is important to educate yourself about the different types of reverse mortgage available when considering one.

If you would like more information about the reverse mortgage process please call me or one of my team members at 877-787-1003 or send an email here: info@thebarathgroup.com
We will be happy to provide a complete complimentary analysis of the amount of money you could expect to receive from the best available products.


James Barath, CMA, CMPS

Phone: 877-787-1003
Fax: 888-797-9062

 Photo of James Barath, CMA, CMPS

James Barath, CMA, CMPS
Reverse Mortgage Specialist

Email: info@thebarathgroup.com

Phone: 877-787-1003

We hope this site has been helpful. Please allow us to handle your Reverse Mortgage for you when you are ready.

Equal Housing Lender | Canopy NMLS 1359687

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