According to the average individual a reverse mortgage is a loan that you can borrow that goes against your house and you do not have to ever make a payment on that loan until you no longer live at that home. This loan is meant for people who are at least sixty two years old or older and originally it was meant to help those who were retired with their expenses of living daily as well as their costs for medical needs.
However some people have used the reverse mortgage that they get for fixing things around the house such as improving things, renovating things or adding more to the house. Some people have also used the reverse mortgage loan that they get to pay off a mortgage that they already have on the house to just try and make things easier and a bit more affordable for a little amount of time; or at least until they no longer live at that house.
There are three main kinds of reverse mortgages; they are known as the single purpose reverse mortgage, the proprietary reverse mortgage and the home equity conversion mortgage. The single purpose reverse mortgage is usually given by state and or local governments as well as some groups that are nonprofit. This type of loan is meant to be used for only one purpose such as a renovation of the house or to cover taxes of the property; the main advantage of this type of reverse mortgage is that it is normally lower in cost than other types of reverse mortgages.
The proprietary reverse mortgage is through companies that are private and they maintain the owner of all of these loans. The companies choose certain people to lend the money to and have their own set of restrictions and or guidelines that need to be followed.
However this type of reverse mortgage loan is not that common because it includes a bunch of startup fees for a credit report, an appraisal and more. Plus they also require you to make a monthly payment for a service fee and this is something that you do not have to do with other reverse mortgage loans.
Lastly there is the home equity conversion mortgage which is the most popular type of reverse mortgage loan to get. It has been around since the year of 1987 and this is the reverse mortgage loan that is insured by the FHA, or otherwise known as the Federal Housing Administration. And this type of loan is also the only reverse mortgage that comes with a guarantee from the government that they will do everything that the loan promises they will do.
For any type of reverse mortgage loan there are several factors that need to be considered in which determine the amount of money you can be lent. These factors include but are not limited to your age, what your house is worth, where the house is located and more.