In 2017, the FHA Reverse Mortgage or HECM (click here to learn about the HECM) became less attractive to borrowers, and there was worry the “viability” of the HECM was in jeopardy. So the largest reverse mortgage lenders began create their own versions of the reverse mortgage. Previously there was only 1 jumbo reverse mortgage, but this was only for jumbo sized loans at the time. Each lender has varying nuance to their programs.
Some allow for borrowers to be 60 years old, while none protect non-borrowing spouses (NBS) the way the HECM does. Some have lines of credit or varying methods of drawing funds, while others don’t have restrictions on condos or they allow for lower loan amounts or great loan amounts. You get less of your value than you would with the HECM, but no value limits means higher loan amount for those with higher values. The HECM also has a very expensive upfront and monthly Mortgage Insurance Premium (MIP) that never goes away.
In the end, these types of reverse mortgages are attractive for those who don’t fit into the mold of the HECM, or for those who don’t want all the expense that comes with the HECM. You want to go over the several types of private reverse mortgages with a company who can offer ALL of the ones available out there, which means you must go to a broker like us.