Reverse Annuity Mortgage Tapping Into Your Equity

Reverse Annuity Mortgage Tapping Into Your Equity 1

Reverse Annuity Mortgage – Tapping Into Your Equity
Reverse annuity mortgages (RAM) were created to​ allow older Americans to​ tap into the​ equity of​ their paid for or​ nearly paid for home .​
Homeowners receive a​ tax-free payment each month,​ and the​ mortgage is​ paid when the​ home is​ sold .​
Before you​ choose a​ RAM,​ make sure you​ have evaluated the​ risks since this option can limit future housing plans.
Types Of Reverse Mortgages
One of​ the​ first RAM programs was developed by HUD and is​ still in​ existence .​
To qualify you​ must be 62 or​ older,​ live in​ the​ home,​ and have paid off your mortgage .​
The government will then insure your mortgage.
You can also work directly with private lenders .​
You will want to​ review their terms carefully to​ be sure that you​ are getting the​ full value of​ your home and not paying thousands in​ fees.
With both types of​ RAM you​ will never owe more than what your home is​ worth .​
When you​ decide to​ move,​ the​ loan’s principal,​ interest,​ and fees will be due .​
Any equity remaining from the​ sale of​ your home will be yours or​ can be based onto heirs.
Difference Between a​ Reverse Mortgage and a​ Home Equity Loan
The major difference between a​ RAM and a​ home equity loan is​ when the​ loan balance is​ due .​
With a​ RAM,​ the​ mortgage balance is​ due when you​ stop living in​ the​ residence .​
You don’t have the​ monthly payments of​ an​ equity loan .​
With a​ RAM it​ is​ easier to​ qualify for the​ mortgage since you​ don’t have to​ have income to​ make monthly payments.
Payouts Options
There are several payout options that you​ can choose from .​
a​ tenure policy provides equal monthly payments as​ long as​ the​ borrower lives on​ the​ property .​
a​ term policy gives equal monthly payments for a​ fixed period of​ months .​
With a​ line of​ credit the​ borrower to​ withdrawal funds when needed .​
a​ modified tenure combines a​ line of​ credit with life long monthly payments .​
And finally,​ a​ modified term provides a​ line of​ credit with fixed monthly payments.
Beware Of Scams
There are several scams related to​ reverse mortgages that you​ should be aware of .​
You should not pay thousands for information about a​ RAM .​
This information is​ available freely through HUD and legitimate mortgage lenders .​
You should also avoid any terms that require payments before you​ sell or​ that sell your house within so many years .​
To avoid scammers,​ research terms and rates with several lenders and ask questions.

Reverse Annuity Mortgage Tapping Into Your Equity

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