Other Types of Loans

Reverse Mortgages

Reverse mortgages pay you money as long as you live in your home. These loans are designed for people age 62 and older who own their homes and need an inflow of cash.

The loan is against the equity and isn't paid off until you sell or move out of your home. Until then, you receive regular payments in the amount set up in the terms of the loan.

Reverse mortgages are offered by state and local governments as well as banks and mortgage lenders. Shop carefully for these loans because interest rates and fees tend to be higher than in traditional mortgages. The AARP Web site offers additional information about reverse mortgages.


Conventional vs. Jumbo Loans

A conventional loan is one that falls under the loan limit set by Fannie Mae or Freddie Mac. These limits change annually based on the single-family home price survey done by the Federal Housing Finance Board each October. As of 2002, a conventional loan can be up to $300,700.

Loans that are above that limit are called jumbo loans. Because jumbo loans don't offer the same Fannie Mae- and Freddie Mac-backed safety to investors as conventional loans, their interest rates tend to be higher by about 0.25 percent to 0.50 percent. When the conventional loan limit changes, the FHA loan limit usually changes along with it.