Three Types of Reverse Mortgage Loans

The three basic types of reverse mortgage loans are: single-purpose reverse mortgage loans, which are offered by some state and local government agencies and nonprofit organizations; federally-insured reverse mortgage loans, which are known as Home Equity Conversion Mortgages (HECMs), and are backed by the U. S. Department of Housing and Urban Development (HUD); and proprietary reverse mortgage loans, which are private loans that are backed by the companies that develop them.

Single-purpose reverse mortgage loans generally have very low costs. But they are not available everywhere, and they only can be used for one purpose specified by the government or nonprofit lender, for example, to pay for home repairs, improvements, or property taxes. In most cases, you can qualify for these loans only if your income is low or moderate.

Loan Features

Reverse mortgage loan advances are not taxable, and generally do not affect Social Security or Medicare benefits. You retain the title to your home and do not have to make monthly repayments. The loan must be repaid when the last surviving borrower dies, sells the home, or no longer lives in the home as a principal residence. In the HECM program, a borrower can live in a nursing home or other medical facility for up to 12 months before the loan becomes due and payable.

If you are looking into a reverse mortgage loan in West Palm Beach, call the team at Palm Beach Mortgage Group, Inc.!