A reverse mortgage is a type of mortgage that gives you money against the equity value of your home. This is a facility that is available for individuals above the age of 62 years in the United States, helping them with their day-to-day finances without them having to look or work for alternative sources of funding. There are different forms of reverse mortgages that can be taken and it is wise to know the basics of a reverse mortgage before applying for one.

The basics of a reverse mortgage
Let’s understand what exactly is a reverse mortgage by looking at the types available today.

• Proprietary reverse mortgage
  A proprietary reverse mortgage is a private loan. Individuals who have homes with a higher value can apply for this type of reverse mortgage. The amount, in this case, can even go to millions. It all depends on what the lender is comfortable with giving. A homeowner who has a very expensive property would benefit from this type of loan. It is not federally insured and finally, there are no restrictions on the money received and the individual can use it for anything.
• Single-purpose reverse mortgage
  This is the next type of reverse mortgage available. A single-purpose reverse mortgage is a mortgage that comes with an instruction of what the money can be used for. This is very limiting. For instance, it will be pre-decided, by the lender, that your reverse mortgage money will be used for a certain expenditure that you have to carry out such as house repairs. This form of a loan is really useful for anyone with no source of income. Single-purpose reverse mortgages are not available everywhere. They are given by local agencies of the government or by non-profit organizations.
• Home equity conversion mortgage
  The home equity conversation mortgage facility is also known as HECMs. This is the most common type of reverse mortgage and has support from the U.S. Department of Housing and Urban Development. Also, it is federally insured. With HECMs you can get your money in a lump sum, monthly payments, a line of credit or even a combination of a credit line and monthly cash payments. An important piece of information to know about HECMs is that you will need to meet a counselor before going through with it so that you can fully understand the basics of a reverse mortgage before you complete the process. This is very helpful if you are completely unaware of essential information on this type of loan. There are many terms and conditions that you need to know. The counselor may also guide you to alternative options of getting a reverse mortgage such as a proprietary reverse mortgage. This session is charged but can be paid from the loan amount.

It is important to note that there have been instances where people have been cheated by scams involving reverse mortgages. Do not make a quick decision that you will regret. Take help from a family member or speak to a person with a strong knowledge of finance for help.