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MBA Urges Regulators To Avoid Invoking Suitability Standards
The Mortgage Bankers Association (MBA) recently made a preemptive strike against what it obviously perceives as the next threat against the mortgage industry - "suitability standards." Read more...

 

The Three Types Of Reverse Mortgages

Reverse mortgages represent loans against your home that you don't have to pay back for as long as you live in your home. When it comes to the base of the thing, there are three types of reverse mortgages.

There are the single-purpose reverse mortgages which are offered by some state and local government agencies and nonprofit organizations. Single-purpose reverse mortgages will usually have very low costs, but they are not available everywhere. These types of reverse mortgages can only be used for one purpose which is specified by the government or nonprofit lender. Generally, you can qualify for these reverse mortgages only if your income is low or moderate.

Then there are the federally-insured reverse mortgages which are also known as Home Equity Conversion Mortgages or HECM. These reverse mortgages are backed by the U.S. Department of Housing and Urban Development (HUD). This option gives you options in how the loan is paid to you. You can select fixed monthly cash advances for a specific period of time, or for as long as you live in your home but you can also opt for a line of credit, which will allow you to draw on the loan proceeds. Home Equity Conversion Mortgages usually provide larger loan advances at a lower cost compared with proprietary reverse mortgage loans. But the owners of higher-valued homes may get larger loan advances from proprietary reverse mortgages.

Last but not least, the third types of reverse mortgages are called proprietary reverse mortgages, and these are private loans that are backed by the companies that develop them.

Reverse mortgages have a lot of advantages, and the first one you can count is the fact that the advances are not taxable. Also, reverse mortgages won't normally affect your Social Security or Medicare benefits. And most important is that you retain the title to your home.

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