Reverse Mortgage Guide

If you’ve been thinking of getting a reverse mortgage you may wonder how you will be paid. In general terms you have six options:

Line of Credit: Just a like a home equity loan, with a line of credit you can borrow against you credit line up to a maximum limit.

Modified Term: This is an arrangement where you receive a specific dollar amount each month for a set number of months, say 120 or 180 months (10 or 15 years) plus a line of credit. Two questions here: What happens after the payments end? Are fixed payments a good idea given that the value of a dollar is likely to buy less over time?

Modified Tenure: With this option you get payments for life — your life. Plus a line of credit. Compare the size of monthly payments with other options — and then consider that eroding value-of-the-dollar.

Tenure: You get equal monthly payments for the rest of your life, as long at least one borrower remains at the property.

Term: You get set monthly payments for a fixed number of months.

What’s the sixth option? None of the above. Remember that reverse mortgages are good for some prospective borrowers but not for others.

For specifics and independent advice, speak with a CPA or other tax professional as well as an attorney who specializes in elder law.

This entry was posted on Friday, July 13th, 2007 at 2:35 am and is filed under Reverse Mortgage . You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.