Homeowners in Delaware who are thinking about taking out a reverse mortgage home loan may have a few different options available to them. The most popular reverse mortgage loan is the home equity conversion mortgage, or HECM. This type of loan tends to have the lowest rates, and HECM loans are backed by the Federal Housing Administration.
To qualify for an HECM loan, a homeowner must be at least 62 years old and have equity in the home. No income or credit requirements apply to this loan, but the home must be up to code, and the homeowner must complete reverse mortgage counseling. The FHA limits the maximum loan amount to 100 percent of the home’s value and requires homeowners to purchase an insurance policy called a mortgage insurance premium.
Another type of loan that a homeowner could apply for is a reverse annuity loan. This kind of loan is an agreement between the homeowner and the lender where the homeowner borrows a certain amount of money based on the value of their home. A homeowner who has a strong credit history and steady income stream may be able to qualify for a non-FHA private company reverse mortgage loan. These are loans offered by private lenders, and they usually have higher interest rates and fees.
A real estate attorney could help a homeowner to understand the various kinds of reverse mortgages that might be available. If a homeowner decides to apply for a loan, an attorney may be able to help improve the chances of receiving the loan by assisting with the application process.