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 loans 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...
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