Proprietary Reverse Mortgages
What is a Proprietary Reverse Mortgage?
Proprietary reverse mortgages are loan programs offered by specific lenders and they are not FHA-insured. They are not bound by county lending limits or standard FHA requirements but do have their own set of qualifications that differ from the FHA-insured HECM program. As a non-recourse loan with no required monthly mortgage payments, a proprietary reverse mortgage carries some of the same features as a standard HECM.
Proprietary vs. HECM
Proprietary reverse mortgages are designed to suit people in a variety of situations. Some want more cash out than the HECM can provide, some have a home valued over the county lending limits, while others just want to avoid the FHA insurance of the standard HECM. A proprietary reverse mortgage may be right for you but not all brokerages offer proprietary reverse mortgages or have a multitude of programs from which to choose.
Contact us to request a complimentary, no-obligation consult with one of our specialists.
Proprietary
- Low upfront costs
- Easier income qualification
- Loan amounts up to $3 million
- No mortgage insurance premium
- Structured and insured by private lenders
- Loan amount based on the lender
- Proceeds can be used for anything
- Loan proceeds are non-taxable
- Funds are usually available in one lump sum
- No penalties for prepayment
HECM
- Lower loan amounts
- Homes valued up to $765,600
- Insured by the Federal Housing Administration
- Loan amount based on a variety of factors, including age of the youngest borrower, home value and current interest rates
- Money can be used for anything
- Funds can be disbursed in multiple ways – tenure, term, modified term, line of credit
- Loan proceeds are non-taxable
- No penalties for prepayment
What is a Jumbo Reverse Mortgage?
A Jumbo reverse mortgage is a proprietary reverse mortgage loan for homes valued more than $765,600. This limit is set by the U.S. Department of Housing and Urban Development (HUD). Jumbo reverse mortgages can have lower closing costs while offering larger payout options.
Frequently Asked Questions
When is a proprietary reverse mortgage better than a HECM?
A proprietary reverse mortgage is better than a HECM when the home appraises for more than $765,600 or a borrower desires a loan with lower closing costs.
Is there mortgage insurance on a proprietary reverse mortgage?
No. These loans are not federally insured, therefore there are no monthly mortgage insurance premiums to pay.
Do proprietary reverse mortgages have higher closing costs than a HECM?
Generally, no. Without mortgage insurance, the closing costs stay lower.
Do proprietary reverse mortgages have higher interest rates than a HECM?
Yes. HECM loans sit around 3 to 5% while proprietary loans can go as high as 7%.
Work With Northwest Reverse Mortgage
At Northwest Reverse Mortgage, we maintain a robust offering of loan products and lender options to find you the program that fits your situation the best. We are always seeking out new programs and gathering information on everything available. Our proprietary loan programs currently include:
Pros and Cons of a Proprietary Reverse Mortgage
As with any financial decision, there are pros and cons to taking out a proprietary reverse mortgage. Northwest Reverse Mortgage helps you understand all aspects of this process to ensure you make the best decision for your needs.
Pros
- No more monthly mortgage payments
- Funds can be used for anything
- Home title remains in your name
Cons
- Funds are usually available in one lump sum
- Could potentially impact needs-based programs
Wondering how much you may qualify for, or whether this program is a fit for you? Call us today at 503-427-1667 or fill out the form on this page to request a complimentary, no-obligation consult with one of our specialists.
