Some folks will utilize it to pay for expenses, vacations, house renovations or perhaps to settle the staying amount on their regular mortgagewhich is nuts! And the consequences can be substantial. HECM loans are continued a tight leash by the Federal Housing Administration (FHA.) They do not want you to default on your home mortgage, so since of that, you will not qualify for a reverse mortgage if your house is worth more than a specific amount.1 And if you do get approved for an HECM, you'll pay a significant mortgage insurance coverage premium that safeguards the lending institution (not you) versus any losses - what credit score do banks use for mortgages.They're offered up from privately owned or run business. And since they're not controlled or guaranteed by the federal government, they can draw homeowners in with promises of greater loan amountsbut with the catch of much greater interest rates than those federally guaranteed reverse mortgages. They'll even offer reverse home mortgages that allow property owners to borrow more of their equity or consist of houses that exceed the federal optimum amount.