You might have been listening a lot about reverse mortgages these days and might be curious how does a reverse mortgage work, what they’re and if you should get one.
Although there are three types of reverse mortgages there are only two that are normally referred to. The most common reverse mortgage is officially called a Home Equity Conversion Mortgage (HECM). This type is supported by the federal government’s Department of Housing and Urban Development (HUD). The other type is called a proprietary reverse mortgage and is supported by private companies and not federally insured.
A reverse mortgage is only a high cost loan, but no one appears to tell us that. The upfront costs can be real high. This makes it even more expensive if you live in your house for a short period. This type of reverse mortgage is easy to get if you qualify by age and have decent equity.
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