Reverse Mortgages for Seniors
More lenders now offer
"conventional" reverse mortgages that are not insured by the
federal government, but feature many of the same important
consumer protections, including mandatory counseling and asset
protection (referring to the non-recourse feature that limits
the amount you owe to the value of the home).
Conventional reverse mortgages
are also referred to as "jumbo" loans. Unlike the FHA HECM,
which has area lending limits conventional reverse mortgages
either have no limits, or they're much higher, like $2-4
million. If you live in a home valued at $550,000 or higher,
you may be able to access more equity from a conventional
reverse mortgage than you would an FHA HECM.
Most conventional programs offer
lower upfront costs, compared to the FHA HECM, especially if
you take all the proceeds upfront as a lump sum. The interest
rate charged is typically based on the London Interbank
Offered Rate (or LIBOR), plus a margin. Some products offer
adjustable rates as well as fixed.
Most lenders that offer the FHA
HECM, also offer one or more conventional programs. Be sure to
ask your lender which conventional programs they offer.
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