Private Reverse Mortgages

An HECM or Fannie Mae is almost always the most economical type of private reverse mortgage, because they are insured by the government. If you are considering a private reverse mortgage that is not an HECM or Fannie Mae instrument, review the terms carefully before signing any agreement, and consider whether it will cost more, what the relative benefits would be, and what risks you may be taking. As with any type of mortgage, compare offers from three or four lenders before making a decision. Even among HECM or Fannie Mae lenders, your costs may vary.

One of the largest private reverse mortgage programs that is not insured by the government is the Financial Freedom Plan, which is owned by the Financial Freedom Senior Funding Corporation. It is available to seniors in all 50 states.

Some lenders may prefer to use this plan, because the limit is significantly higher, there is virtually no limit on home value with the Financial Freedom Cash Account program. Under this plan, you receive your funds in one advance payment. If you wish to instead have monthly payments for life, which is an option under Fannie Mae and HECM loans, you must purchase an annuity with the proceeds. Although Financial Freedom does not sell annuities directly, they will assist you with purchasing one.

The costs for the Financial Freedom plan are higher than with the Fannie Mae or HECM loans, although the higher costs may be offset by the higher amount you can borrow. Financial Freedom loans may be desirable for those who have homes with high values. There are no income qualifications, and like all reverse mortgages, the proceeds are non-taxable.