There are two basic types of reverse mortgages, the Home Equity Conversion Mortgage (HECM) series of products which are federal backed mortgages, and proprietary reverse mortgages backed by large private investors. Allow me to break down the HECM series as these are by and far the most common product.

HECM Variable

Variable refers to the variable interest rate on this loan, however I like to think of them as variable in how they can be used. The key reason homeowners to select this product is the flexibility. Homeowners can receive
the proceeds as:

Monthly income for as long as they live in the home,
Lump sum draw on the mortgage as they have specific needs.
Any sort of combination of monthly income and lump sum

The deferred interest will vary with the market rates subject to certain limits. While this is important to most homeowners it is not a critical item since the interest is deferred and not paid by the homeowner unless they sell the home.


This product allows the borrower to maximize the amount of cash they receive from their home. It also tends to have lower closing costs to the homeowner. The advantages of this product is that the deferred interest rate is fixed and will not vary, and all the proceeds are received as a single lump sum payment at the time of closing.


The Saver option is one may homeowners are now seriously considering. The Saver reduces the mortgage insurance fee’s charged by HUD and therefore seriously reduces the overall loan costs. The disadvantage is that it also tends to limit the amount of money available to the homeowners.

We at California Reverse Funding will work with you to help you determine which of these products would best fit your needs. We work with all the major providers of these mortgages allowing us to offer the homeowner options. Something very desirable when making financial decisions. Nobody wants to be boxed into a corner.