General: Different Reverse Mortgage Options

There are many different reverse mortgage options: single purpose reverse mortgages, federally insured reverse mortgages, and proprietary (private sector) reverse mortgages. Each option has different pros and cons that need to be considered when looking into taken out a reverse mortgage.

Single-Purpose Reverse Mortgages

A single purpose reverse mortgage is the lowest-cost type of reverse mortgages to obtain, but as the name indicates it can only be used for one specified purpose. They are typically offered by state or local government agencies. These loans a great for individuals who need cash for a specific purpose like paying property taxes or fixing up there homes. Here are descriptions for several different types of single purpose reverse mortgages:

• Property tax deferral (PTD) mortgages are reverse mortgages that provide loan advances for paying property taxes.
• Deferred payment loans (DPLs) are reverse mortgages providing lump sum disbursements for repairing or improving homes.

Federally Insured Reverse Mortgages
A federally insured reverse mortgage is the only reverse mortgage insured by the Federal Housing Administration (FHA). These reverse mortgage are one of the lowest-cost multipurpose reverse mortgages currently available. Overall they typically provide the largest total cash benefits of all the reverse mortgage options. The proceeds from a federally insured reverse mortgage can be used for any purpose. These loans are also known as Home Equity Conversion Mortgages (HECMs).
Proprietary Reverse Mortgages
A proprietary reverse mortgage is a mortgage product owned by a private company. These type of loans are more expensive then the other reverse mortgage types and should be approached with caution. Anyone looking into these type loans should get a comparison with a similiar HECM. One benefit of proprietary reverse mortgages are the higher home value limits. So, if you live in a home that is worth a lot more than the average home value in your county, a proprietary loan may give you greater loan advances than a Home Equity Conversion Mortgage (HECM).
As with any financial decision, you should get professional help to help you decide which option is best for your situation. Reverse mortgage counselors can help you evaluate each of your options and help you make an informed decision.
Resource box: For more information visit reverse annuity mortages or the reverse annuity mortgage blog.

Fifth Record Year for Top Reverse Mortgage Lender

Financial Freedom, a subsidiary of IndyMac Bank F.S.B. (Indymac Bank), the nation's largest lender of reverse mortgages, announced that 2005 was its fifth consecutive year for a record number of reverse mortgage loan fundings and applications. Last year, Financial Freedom closed 30,991 loans, representing a 56 percent increase over 19,817 in 2004.

"The number of loans closed this year clearly demonstrates the increasing consumer understanding and appreciation of reverse mortgages as an answer to a wide range of seniors' financial needs," said Jim Mahoney, CEO of Financial Freedom.

Even more impressive then the increase in the number of reverse mortgages funded, was the most dramatic increase in volume dollars. In 2005, Financial Freedom closed $2.9 billion in loans, compared with $1.6 billion in the same period ending December 31, 2004. This represents an 81 percent increase, which indicates that in addition to closing more loans, the average home value per loan has increased as well.

Financial Freedom's loan volume is comprised mainly of two types of loans: FHA's Home Equity Conversion Mortgage or (HECM), the predominant reverse mortgage product in the marketplace; and the Financial Freedom Cash Account, which is the only jumbo reverse mortgage available and designed for homes in excess of $450,000 in value.

ABOUT FINANCIAL FREEDOM: Financial Freedom is a founding member of the National Reverse Mortgage Lenders Association. NRMLA is a nonprofit trade association, based in Washington, DC, whose mission is to support the continued evolution of reverse mortgages as an important financial option for senior homeowners while educating both its members and consumers about the varied applications of this unique loan. For more information, visit the Financial Freedom Web site at www.financialfreedom.com.

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Reverse Mortgage Specialist Sentinel launches in South Africa

Reverse mortgage (home equity release) specialist Sentinel has just launched in South Africa.

Its South African company is a joint venture to be known as "Senior's Finance", with financial services company the Alexander Forbes Group. The company is already well established in its home country New Zealand, Australia, and Ireland with its reverse mortgage model.

Sentinel sees South Africa as an ideal market for home equity release, as house prices have grown very strongly over recent years, but seniors have very little savings and pensions. Due to the low savings rate, the company estimates that 90% of retirees will not be able to maintain their pre-retirement lifestyles during retirement.

Sentinel is planning two further launches in the pipeline.