What are the different types of reverse mortgages?
When considering a reverse mortgage, make sure to find out how the lender is insured. There are three types of reverse mortgages: • Federally insured – Lenders that participate in the Home Equity Conversion Mortgage (HECM) program are backed by the Federal government, which means that if they default on your loan, you would continue to get payments. • Privately insured – These lenders are privately insured and may give you more money than federal (HECM) lenders. However, if they get into financial trouble before you receive the full amount of your loan, you may not receive all of it. • Uninsured – These loans provide regular payments for a fixed term (usually 3 to 10 years) and are not federally insured. If you are considering a federally insured loan, the Housing Counseling Clearinghouse provides educational counseling and information at 1-888-466-3487.
