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Types of Reverse Mortgages
The amount of money that borrowers can borrower depends on the type of reverse mortgage.
1. Home Equity Conversion Mortgage (HECM)
2. Fannie Mae Home Keeper® loan
3. Proprietary Reverse Mortgage Products
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The HECM program is offered by the Department of Housing and Urban Development (HUD) and
insured by the Federal Housing Administration (FHA). The Federal National Mortgage Association (Fannie Mae) currently purchases all HECM loans
originated by approved lenders. Borrowers can select to receive HECM payments as a lump sum, line of credit, fixed monthly payment (for a specific period of time or for life), or a combination of payment options. Borrowers can change payment options at any time for a small fee. Any unused funds in the HECM line of credit grow by a percentage per annum that is equal to the interest rate of the loan. HECM loans are federally insured and make up approximately 95% of all reverse mortgages. | ||
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The Fannie Mae Home Keeper® loan is available to homeowners age 62 and older in all 50 states. Payment options include fixed monthly payments for life, a line of credit, or a combination of these payment options. However, the Home Keeper® credit line does not increase. Fannie Mae loans are government sponsored but not government insured. Another difference is that they can be used to purchase a new home. | ||
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Seniors age 62 and older may also apply for proprietary reverse mortgages. These proprietary mortgages are available to seniors who qualify based on the institution's criteria. Proprietary loans are especially beneficial to homeowners with expensive homes. Borrowers can select an open-end line of credit (where they can borrow, repay, and borrow again). The line of credit is available for as long as the borrower occupies the home. Unused funds in the line grow at a fixed annual rate. These loans are neither governmentally insured nor sponsored. |
