Types of Reverse Mortgages

When considering a reverse mortgage, it’s important to understand the different types available. The most common type of reverse mortgage is the Home Equity Conversion Mortgage (HECM), which is insured by the Federal Housing Administration (FHA). The HECM offers various payment options, including a line of credit, monthly payments, term payments, or a lump sum. Another option is the adjustable-rate reverse mortgage, where the interest rate can change over time. On the other hand, fixed-rate reverse mortgages provide a consistent interest rate throughout the loan term. Each type of reverse mortgage has its advantages and considerations, and it’s essential to speak with a lender or financial advisor to determine which option aligns with your needs and financial goals. Additionally, it’s important to note that counseling from a HUD-approved housing counseling agency is mandatory before obtaining a reverse mortgage to ensure borrowers are fully informed and understand their obligations. By exploring the different types of reverse mortgages and seeking professional guidance, homeowners can make an informed decision that aligns with their financial situation and retirement plans.