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Reverse Mortgages are financing instruments that
allow you to mortgage your home and receive payments
in return. There are three types of reverse mortgages
available. The basic terms and conditions for all
these reverse mortgage products remain the same but
interest rates and loan amounts will differ. The Home
Equity Conversion Mortgage (“HECM”) has
the lowest interest rate and the lowest loan amount
available. The Cash Account has the highest interest
rate and there is no limit on the loan amount. With
regard to interest rate, the Fannie Mae loan is somewhere
in between the two.
Reverse mortgages can be classified as either federally
insured reverse mortgages, government sponsored reverse
mortgages, or proprietary reverse mortgages. Each
of these has products defined under them. Below is
a brief description of each reverse mortgage product.
- Home Equity
Conversion Mortgage (HECM) – These reverse
mortgages are federally insured by the U.S. Department
of Housing and Urban Development (HUD). The maximum
loan amount for the 2006 calendar year is $362,790
and these reverse mortgages can be used to fulfill
many of your financial needs. This product is used
to refinance an existing residence.
- Fannie Mae
Home Keeper® reverse mortgage – This
is a government sponsored reverse mortgage. It is
mainly used for purchases of a primary residence.
- Cash
Account – This is a proprietary product
of Financial Freedom, a private lender of reverse
mortgages. Cash Accounts are not available in all
states. Cash Accounts have three sub-options: Standard,
Zero Point, and Simply Zero. Each of these options
has unique significance and terms. Cash Accounts
are used to refinance an existing residence.
Please click on the product names above to get more
information on them. |
