What are the Different Types of Reverse Mortgages?

Tips for investing in a reverse mortgage and finding the proper reverse mortgage for you.

Many seniors today are encouraged to invest in a reverse mortgage. The most common type of reverse mortgage plan allows homeowners over the age of 62 to receive a monthly payment for the rest of their lives, provided they remain in their homes. There are several other types of reverse mortgage plans available for seniors who do not want to be tied to one place or leave a large debt behind for their heirs.

TRADITIONAL REVERSE MORTGAGES

The traditional reverse mortgage plan is called the tenure payment plan. Under this plan, the senior citizen agrees to accept a loan payment each month. If she moves out of the home or dies, the mortgage comes due and must be repaid. Seniors who are in good health and do not plan to move for other reasons often take advantage of this plan because it gives them extra income on top of their Social Security and pension plans. However, if a senior has to move due to unforeseen circumstances such as serious illness, he will face a large debt.

TERM LIMITED REVERSE MORTGAGES

Term limited reverse mortgages are similar to the tenure payment plan, but the agreement is for a limited amount of time. Seniors who are planning to move within a few years may find this plan helpful. They can save the extra money to help cover moving costs but not amass a large debt when they move.

LUMP SUM REVERSE MORTGAGES

Lump sum payment plans allow the homeowner to receive one large payment instead of years’ worth of monthly payments. This mortgage plan works best for seniors who are facing a large financial burden such as extensive medical care.

REVERSE MORTGAGE LINE OF CREDIT

Seniors who prefer not to leave debt behind or don’t need money on a monthly basis can opt for a line of credit instead of a monthly payment plan. They can draw upon the credit line as needed and will only be liable for credit used.

Related posts

1. Who Qualifies for a Reverse Mortgage?
2. Why Should I Invest in a Reverse Mortgage?
3. Can I Use the Funds Received From a Reverse Mortgage Any Way I Choose?
4. How Do Traditional Mortgages and A Reverse Mortgage Differ?
5. Is There A Choice How I Receive My Cash From A Reverse Mortgage?

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