If you’re tight for cash, sometime a loan from the bank may not be enough. Loans often require payments to be made, and if you’re dealing with problems that are preventing you from working, it may not be possible for you to make the payments. A reverse home mortgage allows you to borrow money on the equity of your home, and defer the payments in different ways.

There are three main types of reverse home mortgages:

* Single-Purpose Reverse Mortgages
* Home Equity Conversion Mortgages (HECM)
* Proprietary Reverse Mortgages

Choosing the correct one will give you the best interest rate and terms of your loan. A single purpose home mortgage is usually the lowest cost mortgage. However, it can be the most difficult to attain because it is not offered everywhere, and the terms of the mortgage usually require the money to be spent for a specific purpose.

An HECM is usually more costly than a single-purpose home mortgage, but the money can be used for any purpose. HECM’s are slightly different from a proprietary reverse mortgage, because they are loans backed by the government Housing and Urban Development department. They require a meeting with counselor in order to be approved for the mortgage.

A proprietary reverse mortgage is similar to an HECM, but it is handled by a private lending company rather than a federal one. Since it is handled privately, you don’t have to meet with a counselor to discuss the terms of the mortgage. The rates on this type of mortgage can be high, though, and the best mortgage to choose if you’re planning on spending the money for one specific purpose is usually a single-purpose reverse mortgage.

Remember to always review the mortgage entirely before you sign anything. Even if you aren’t required to meet with a counselor before, it’s important to know what you’re getting into before you sign anything.

    Posted in Mortgage from Investor on 2. Jun. 2010