As retirement looms in the not too distant future, aging baby boomers are looking for ways to tap equity in their primary residence to finance their golden years. Reverse mortgages have been around about ten years, but only in the last three have they gained prominence. A Reverse Annuity Mortgage or RAM allows those 62 years old and older who own their home, to tap equity, but not sell the property. -In a Reverse Mortgage, the lender makes payments to the homeowner instead of the typical arrangement where the homeowner makes payments to the lender. -Payments can be made in a variety of ways to the homeowner. A one-time lump sum payment, a line of credit, or monthly, quarterly or annual payments for lifetime or monthly, quarterly or annual payments for an agreed number of years. -The property owned by the homeowner must be free from liens and mortgages. -The property must be the primary residence of the homeowner and occupied more than six months in a year. -Reverse Mortgage payoff is due upon the death of the borrower and other co-owners or borrowers or the home is not the primary residence of the homeowner. -Consult with an tax accountant and an attorney before making an application for a Reverse Mortgage. |
