Many homeowners have heard of reverse mortgages but may not realize there are different types of programs available. The two primary types are:
1. HECM (Home Equity Conversion Mortgage)
This is the most common reverse mortgage and is insured by the FHA. Borrowers must generally be 62 or older and complete counseling with a HUD-approved housing counselor before applying. A HECM allows homeowners to access part of their home equity through options such as a line of credit, monthly payments, a lump sum, or a combination of choices.
2. Proprietary Reverse Mortgage (Jumbo Reverse Mortgage)
These are private reverse mortgage programs designed primarily for homeowners with higher-value homes. Age requirements vary by lender and state, and in many states some programs allow borrowers to qualify as young as 55.
Regardless of the program, the homeowner keeps ownership of the home and remains responsible for property taxes, insurance, HOA dues (if applicable), and maintaining the property.
A reverse mortgage can be a valuable retirement planning tool for the right homeowner, but understanding the options and protections is important.
I will be sharing more information about reverse mortgages, including borrower protections and common myths, in upcoming posts.
Doug Jones nmls 286668
Certified Reverse Mortgage Specialist
Mortgage Magic
