Reverse Mortgages

Reverse Annuity Mortgages are a growing new trend in
residential financing, especially among senior citizens. This
articles aims to uncover just what a Reverse Annuity Mortgage is, and whether
or not it’s right for you.

A regular mortgage is when you receive a loan to buy a
house, and are obligated to pay back the principal of the loan, plus any
interest that has accrued over time, on a monthly basis. A Reverse
Mortgage however, works in the opposite way. If you take out a
reverse mortgage, lenders are holding out money to you based solely on the
equity in your home. However you are not required to make monthly
payments. Instead, the loan ends either when the homeowner dies,
sells the house, or moves into an assisted living facility. At
that point the money gained from the sale of the house is used to pay off the
loan and any interest, and the remainder from the sale goes to the estate.

There are several different types of reverse
mortgages that you can take out. Either you can receive a lump sum
payment, monthly payments, or you can request funds when necessary, similar to
a home equity line of credit. You can also choose to format the
loan either as a tenure plan, in which you receive payments as long as you
remain in the home, or on a monthly plan for a specified amount of time.
Either way, at the loans end you cannot be indebted to the lenders
more that the estimated value of the home. Depending on your
situation one may provide you with more money than the other.

A typical example of someone who would take
out a reverse mortgage, is an elderly person or couple who is living in a home
that they have resided in for a long time. Their Social Security
checks and their savings are not enough to maintain their residence for a
significant period of time, but they do not want to vacate the house.
A reverse mortgage is an ideal solution for them, so that they
will receive either a lump sum or monthly stipends for the rest of their
residence in the house.

Before you make this big decision you need to
ascertain if this is the right move for you? Talk to your kids,
talk to your family. Do you want to stay in your house?
Do you see yourself ever selling the house? Do any of
your kids want to possibly move in to the house at any point? Can
your current income cover your living costs? Would you ever
consider moving into a assisted living facility? These are all
questions you need to ask yourself and your loved ones before making this
decision. It is also important to consult with a licensed CPA or a
Financial Planner before making any decisions. While there are
many things to consider, a reverse mortgage could be the perfect choice for you
to remain in your home and reduce your financial stress.