Reverse Mortgage. Should she get an annuity?

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My mother has a line-of-credit type Reverse Mortgage. She really could live without it but now that she has it, can she get an annuity, and will that be a wise decision. She has had the loan for 1 year.

2 Comments
  1. Reply
    OShenandoah
    February 10, 2011 at 11:28 am

    Reverse mortgages should be a “last resort” move.
    The problem being the lenders take a huge amt. in interest –
    much like a “regular” mortgage, in the early years of paying..

    Example: On a regular mort. if your payment, in the early years, is $ 700 – as much as $ 550 of that payment can go to interest (and not into paying off the debt)!

    So a reverse mort. causes you to lose a lot of the equity you built up in the house – because the same kind of interest is being taken by the lender.

    As I recall, you’re given several options of how you want the reverse mort. to pay out – monthly, annually, or “as needed”.
    And, I believe the only one of these 3 options allows any interest to be earned by the mort. holder is the 3rd option.

    I believe the best option is – the 3rd option -to leave
    the funds in, earning a little interest, and draw off large sums as needed. (especially if she doesn’t require the funds for normal expenses) That way, at least you’re “re-earning” some interest money.

    The reverse mortgage programs vary from lender to lender. Of course, it would be great if you could speak to a knowledgeable loan officer.

  2. Reply
    Byron W
    February 10, 2011 at 11:57 am

    what kind of annuity?

    no to a fixed period of years annuity, maybe to a life long annuity

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