What is a Reverse Mortgage?
There are two types of reverse mortgages –
• There is a Home Equity Conversion Mortgage (HECM), which in its simplest definition is a loan that is government-insured by HUD and is regulated by the U.S. Federal Housing Authority (FHA), and
• A Proprietary Reverse Mortgage, which is a reverse mortgage originated by a mortgage broker that uses a wholesale lender like Finance of America Reverse (FAR), United Northern Mortgage Bankers (UNMB), American Advisors Group (AAG), etc. that have reverse mortgages programs especially for Condos and “Jumbo” properties (properties valued over $453,100).
Both types of reverse mortgages are intended for individuals aged 62 and older, with primary residences, where there is a small loan balance (in relation to the value of the home) or they own the home outright, which require no monthly mortgage payments of principal and interest; homeowners are still responsible for paying property tax and insurance.