Reverse Mortgage Types: Proprietary Reverse Mortgages
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There are similarities between every reverse mortgage loan and every reverse mortgage lender, but it is often the case that the differences are greater than the similarities. The similarities usually lie along the lines of the repayment terms, because those are really what define a reverse mortgage and differentiate it from a home equity loan. However, outside of the repayment terms there is a lot of room for variation and depending on who and where you live in the country, the reverse mortgage options available to you might be different; especially if you decide to go with a reverse mortgage loan that falls into the broad category of proprietary reverse mortgages.

Proprietary Reverse Mortgages

A proprietary reverse mortgage, as the name might imply, is a completely private loan that is given out by a completely private institution. In other words, there is no government involvement whatsoever. The government is neither responsible for administering the mortgage, insuring it or even sponsoring it in the slightest. There are a number of different proprietary reverse mortgages available today simply because there are a number of different loan providers that are privately owned corporations.

Proprietary Reverse Mortgage Considerations

The first thing that you need to consider when it comes to proprietary reverse mortgages and the reverse mortgage lenders that give them is the fact that there are very few restrictions on these mortgages. Because there is little to no government regulation involved in proprietary reverse mortgages, there are a number of options open to the provider that they can then pass onto the customer. This provides for a great amount of variation in proprietary reverse mortgages and ultimately means that you have a lot more choice in your terms.

Also, because there is no government regulation, proprietary reverse mortgages might be completely different from what you expect. A mortgage being sold in New York State might be completely different from one in California, with a whole spectrum of variation in between. Additionally, because governments do not have any regulatory abilities or involvement in proprietary reverse mortgages, some states actually do not allow some proprietary reverse mortgage loans. If you are at all unsure, it is best to check with either the mortgage provider or your local government authority.

Finally, considerations also need to be made for the type of property and its value. Because proprietary reverse mortgages are less restrictive than other kinds, they tend to get better as the value of the house increases. There is a critical point around $500,000 or so in home equity where a proprietary reverse mortgage becomes more cost effective than either of the other two kinds. In addition to that, owners of specialty housing like semi-detached housing and condominium units are likely to get a better deal from a proprietary reverse mortgage because of the less restrictive terms. Of course, this is all very general, because the variability of proprietary reverse mortgages from region to region is quite large. For more detailed information, consult a local reverse mortgage source.

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