proprietary reverse mortgage

A proprietary reverse mortgage, also known as a jumbo reverse mortgage, is a type of reverse mortgage that is offered by private companies rather than being insured by the Federal Housing Administration (FHA) like Home Equity Conversion Mortgages (HECMs). Here are some key details about proprietary reverse mortgages:

  1. Loan Amount: Proprietary reverse mortgages are designed for homeowners with higher-value properties who may require access to larger loan amounts than what is available through HECMs. The specific loan limits vary depending on the lender and the program.
  2. Eligibility: Eligibility criteria for proprietary reverse mortgages may vary among lenders. Generally, homeowners must meet age requirements (typically 62 or older) and have significant home equity. Lenders may also consider factors such as creditworthiness, income, and property value when determining eligibility.
  3. Loan Structure: Proprietary reverse mortgages offer various disbursement options to borrowers, including lump sum payments, monthly payments, lines of credit, or a combination of these. The structure of the loan may vary depending on the lender and the borrower’s preferences.
  4. Repayment: Like other reverse mortgages, repayment of a proprietary reverse mortgage is typically not required until the borrower sells the home, moves out permanently, or passes away. At that time, the loan balance, including accrued interest and fees, becomes due and must be repaid.
  5. Costs and Fees: Proprietary reverse mortgages may have higher upfront costs compared to HECMs. Borrowers can expect to pay fees such as closing costs, origination fees, mortgage insurance premiums, and appraisal fees. These costs can vary depending on the lender and the specific terms of the loan.
  6. Non-FHA Insured: Unlike HECMs, proprietary reverse mortgages are not insured by the FHA. This means that the lender assumes the risk associated with the loan, and the borrower may have different terms and protections compared to those provided by the FHA for HECMs.
  7. Availability: The availability of proprietary reverse mortgages may vary among lenders and regions. Not all lenders offer proprietary reverse mortgages, and their availability may be more limited compared to HECMs, which are more widely available.

If you are considering a proprietary reverse mortgage, it’s essential to research and compare offerings from different lenders. Understand the specific terms, costs, repayment options, and borrower protections associated with each program. Consulting with a financial advisor or a HUD-approved housing counselor can provide valuable guidance in evaluating your options and determining the best course of action based on your individual needs and circumstances.