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Reverse Mortgage Loans

There are several different Reverse Mortgage Loan programs. Fannie Mae Home Keeper®, the HUD-insured Home Equity Conversion Mortgage (HECM) and the Jumbo Cash Account Plan are three such programs. As demand increases, more Reverse Mortgage Loan programs from different organizations will become available. The HECM reverse mortgage is insured by the federal government through the Dept. of Housing and Urban Development (HUD) and is considered an FHA loan. It is the safest loan you can get because it is insured by FHA. It is also currently the most popular reverse mortgage on the market. There are no payments required throughout the lives of the borrowers, as long as they live in the home. You must pay property taxes, homeowner's insurance.

The FHA mortgage insurance provides a guarantee that the homeowner will never owe more than the value of the home at the time it becomes due as long as the loan is repaid by the sale of the home. The fact is that reverse mortgages loan are helping people everyday to keep their homes from foreclosure as well as simply making life in the retirement age more comfortable.

FHA Home Equity Conversion Mortgage or "HECM"

This type of loan is insured by the FHA (Federal Housing Administration), a division of the US Department of Housing and Urban Development (HUD).

The loan amount is based upon your age and the value of the home. HUD regulates the amount of each individual loan, as well as limiting the maximum amounts allowed according to the area of the country. This type of reverse mortgage limits the loan costs. The government guarantees that the lender meets its' obligations.

Many consumers choose the HECM loan because of the credit line growth option. The rate at which the credit line grows is equal to the current interest rate being charged on the loan plus 0.5%.

Unlike other reverse mortgages with the same costs, the cash received from a HECM loan can be used for any purpose. HECM loans also usually provide the largest loan cash advances compared to other reverse mortgage programs

Cash can be advanced to you in three ways:

a single lump sum of cash.

a line of credit for a specific amount from which you decide when and how much to withdraw. The line of credit grows over time.

as a monthly payment made to you over a specified amount of time or as long as you live in the home.

Borrowers can select from one or all of these options, and can change their selection at any time during the loan period, providing further flexibility to the HECM loan.

HECM loans account for the majority of reverse mortgages originated.

Fannie Mae "Home Keeper" Mortgage

This type of reverse loan is guaranteed by Fannie Mae, it is not insured by the FHA.

Cash can be advanced to you in three ways:

a single lump sum of cash

a line of credit for a specific amount from which you decide when and and how much to withdraw. The line of credit does NOT grow.

as a monthly payment made to you over a specified amount of time or as long as you live in the home.

Borrowers can select from one or all of these options, and can change their selection at any time during the loan period.

Proprietary Reverse Mortgage Products

These loans are not insured by the FHA, they are guaranteed by the company from which they are issued.

Cash can be advanced to you in three ways:

a single lump sum of cash

a line of credit for a specific amount from which you decide when and and how much to withdraw. The line of credit does NOT grow.

as a monthly payment made to you over a specified amount of time or as long as you live in the home.

The main advantage of this type of product is that there are no limits to the amount of the cash advanced, in some cases going over $1,000,000 when the value of the home is sufficient. Also they can have no closing costs.