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Mortgages in canada article
Three Types of Reverse Mortgages
Reverse Mortgages were created with the purpose of giving retired Senior Citizens, age 62 or older, a steady income. The senior citizen must also live in his/her home. This income is derived from the equity of the home by a lender. The lender is not reimbursed until the time the home is sold. One caution about reverse mortgages is that the APR on reverse mortgages is usually higher than that of a traditional mortgage. There are three types of reverse mortgages.
The first type of reverse mortgage is Single Purpose reverse mortgage. Single Purpose reverse mortgages are usually granted to those with low to moderate incomes usually by the government. The purpose of this type of mortgages in canada mortgage is to help the homeowner pay for things involving the home and property such as taxes, improvements, and/or repairs.
The second type of reverse mortgage is Home Equity Conversion Mortgages (HECM) also known as federally insured reverse mortgages. This loan is backed by HUD (Housing and Urban Development). This type of loan is pricier than the Single Purpose loan but does not require single purpose use. HECM loans require that you meet with a counselor to discuss costs, risks, and possible alternatives including choosing one of the other two types of loans.
The third type of reverse mortgage is proprietary. The companies that have created them insure these loans. They are very similar to the HECM reverse mortgages in that they are pricier mortgages in canada than the Single Purpose loans and follow the same guidelines in determining who qualifies for one and how much. Proprietary reverse mortgages differ from HECM loans because they do not require meeting with a counselor before applying for one.
Both reverse mortgages however determine the amount you may borrow from assessing factors such as age, home value, location, and interest rates. To determine which reverse mortgage is right for you, you should contact a loans officer knowledgeable of reverse mortgages or a HECM counselor.
Milos Pesic is a mortgage agent and owner of a highly popular and comprehensive us mortgages
informational web site. For more articles mortgages in canada and resources on different types of mortgages and loans, mortgage refinancing, mortgage lenders and brokers and much more, visit his site at:
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