{"id":369308,"date":"2016-04-04T10:47:20","date_gmt":"2016-04-04T15:47:20","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-law\/realestate\/mortgages-equity-loans\/getting-a-good-deal-on-a-reverse-mortgage-loan.html"},"modified":"2025-07-31T16:09:01","modified_gmt":"2025-07-31T21:09:01","slug":"getting-a-good-deal-on-a-reverse-mortgage-loan","status":"publish","type":"page","link":"https:\/\/www.findlaw.com\/realestate\/mortgages-equity-loans\/getting-a-good-deal-on-a-reverse-mortgage-loan.html","title":{"rendered":"Getting a Good Deal on a Reverse Mortgage Loan"},"content":{"rendered":"\n
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Getting a Good Deal on a Reverse Mortgage Loan<\/h1>\n
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\n By Christie Nicholson, J.D.<\/a> | Legally reviewed by Catherine Hodder, Esq.<\/a>\n | Last reviewed\n
\n \n <\/i>\n Legally Reviewed\n <\/summary>\n\n
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This article has been written and reviewed for legal accuracy, clarity, and style by FindLaw\u2019s team of legal writers and attorneys<\/a> and in accordance with our editorial standards<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n\n

\n \n <\/i>\n Fact-Checked\n <\/summary>\n\n
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The last updated date refers to the last time this article was reviewed by FindLaw or one of our contributing authors<\/a>. We make every effort to keep our articles updated. For information regarding a specific legal issue affecting you, please contact an attorney in your area<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n<\/section>\n

If you are considering a reverse mortgage, shop around to compare your options and the offered terms. Learn as much as you can about reverse mortgages before you talk to a counselor or lender. It will help you ask more informed questions, which could lead to a better deal.<\/p>\r\n

What Is a Reverse Mortgage?<\/b><\/h2>\r\n

A reverse mortgage<\/a> is a loan against your home\u2019s equity. Like a mortgage, the amount of the loan depends on the value of the house. Instead of the homeowner paying the bank, the bank pays the owner. In a traditional mortgage, the home purchaser borrows money from the bank to purchase the home, then pays the loan back each month until the balance is zero. The purchaser does not receive the full amount of money from the bank.<\/p>\r\n

In a reverse mortgage, the borrower may receive the entire sum up front or may receive monthly payments depending on the nature of the mortgage. A reverse mortgage lets the homeowner take advantage of their home\u2019s value. It is not repaid while the borrower owns the home.<\/p>\r\n

All reverse mortgages have the same basic requirements. Borrowers must be at least 62 years old and have at least 50% equity in their home. A reverse mortgage cannot exceed the value of the home.<\/p>\r\n

Types of Reverse Mortgage<\/b><\/h2>\r\n

There are several kinds of reverse mortgages. Review each one to be sure you\u2019re getting the one you want. Not all reverse mortgages let you take the full amount in a lump sum or allow you to spend the money for any purpose.<\/p>\r\n

HECM<\/b><\/h3>\r\n

The most common type of reverse mortgage is a home equity conversion mortgage<\/a> (HECM). Reverse mortgage lenders must meet Federal Housing Administration requirements. The loan must follow Housing and Urban Development (HUD) rules.<\/p>\r\n

The federal government insures HECMs and limits the loan amount and interest rates. The use of the loan proceeds is not restricted.<\/p>\r\n

Single-Purpose<\/b><\/h3>\r\n

Single-purpose reverse mortgages are state and local government programs. They usually have lower interest rates and fees. As the name implies, owners may spend the funds for one purpose, and the lender must approve it. Borrowers often get these mortgages for major home improvements or payment of property taxes.<\/p>\r\n

Proprietary Reverse Mortgages<\/b><\/h3>\r\n

These reverse mortgages come from private mortgage companies and banks for homeowners whose properties are over the limits set for HECMs. These so-called \u201cjumbo reverse mortgages\u201d have a few requirements. These mortgages are used by homeowners with high-value properties who need to access more of their equity.<\/p>\r\n

To qualify for a jumbo reverse mortgage, homeowners must be:<\/p>\r\n