Types Of Reverse Mortgages And Alternatives

by Kenneth Sanders on February 16, 2012

The current buzz in the loaning business is now on reverse mortgages. These loans were created for senior-retired citizens of 62 years and above, to enable them generate a steady income from the equity value of their homes. The popularity of these types of reverse mortgages and alternatives is mostly because it is the lender that does the payment to the house owner for a number of years until the house is sold.

A traditional mortgage loan does not vary much from the other one, only that the payment role comes from the lender. The reversed ones are more advantageous in a number of ways. This includes the fact that an individual does not pay the normal monthly mortgage installments as in the other traditional ones.

The main types of these alternative mortgages are three, with the first one being Single Purpose reverse mortgage. This type is mostly offered to those whose incomes are low to moderate. The lender here in most cases is the government to an individual. The main purpose of this loan is to assist the owner cater for any expenses regarding the house.

This could be repair maintenance, taxes and so much more.The second mortgage type is called Home Equity Conversion Mortgage is issued by the federal government. It offers people the chance to own homes.

There are many kinds of these facilities in other words referred to as federal insured mortgage is another type falling under the reversed loans. This one is insured by housing and urban development. It differs from the first type in that it is more expensive and one could use it for a variety of reasons. However, it requires that one meet a counselor to discuss risks involved before one could apply for it.

Proprietary mortgage is the third type. The group of companies that created it insures this one. It is similar to the second type in that it is expensive, and has some guidelines regarding the qualifications of obtaining it and how much one is entitled. The difference between this one and the second type is that the individual does not have to engage a counselor before applying for it.

Several factors influence what type of loan one is eligible for as well as the amount. One of the most important one is the market value of the house. Additionally, interest rates, house location just to name a few are some of the other factors considered in acquiring any of the different types of reverse mortgages and alternatives.

You can find details about the reasons why you should take out a reverse mortgage and a summary of the things to consider before choosing reverse mortgage solutions, now.

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