Funding Your Retirement With Reverse Mortgage Payments
By David Faulkner
If you are an older homeowner facing retirement and not comfortable with the amount of financial security you have in place, your may be overlooking one of your most significant financial assets: your home.

You can use your home to take out a reverse mortgage, and either receive a large amount of cash in a single payment, or receive reverse mortgage payments every month, or simply have a line of credit based on your home’s value. Or if you wish, you can have a combination of lump sum, reverse mortgage payments, and line of credit. And the best part is that you will continue to stay in your home as long as you like. You will hold title to your home and remain responsible for its taxes, insurance, and upkeep.

How Reverse Mortgage Payments Work

Although a reverse mortgage is technically a loan, you will not be making mortgage payments; you will be receiving monthly mortgage payments if you select that option. With each reverse mortgage payment you make, your loan balance will grow, as will the amount of interest you owe.

Paying off the loan balance and accrued interest will fall to your heirs when you die, and is usually done either through the refinancing or sale of your home. If you think a reverse mortgage sounds like a solution for your retirement concerns, you should consider both the advantages and disadvantages.

Your Reverse Mortgage Payment Options

If you take a line of credit against your home, you will only build a balance on your reverse mortgage when necessary. You will have access to a reverse mortgage payment against your credit line whenever you like, and even better, the credit line you have available will increase if your home appreciates in value.

Having reverse mortgage payments available as a line of credit will put your mind at ease regarding your retirement finances, but you will have to sign several documents each time you want to draw down on your credit line.

If you opt to receive your reverse mortgage funds as term monthly reverse mortgage payments, you will get your mortgage payments for a specified length of time, and they will be available for automatic deposit to your bank account to use as you like. Having a guaranteed term reverse mortgage payment each month can let you supplement your other retirement income, but once you settle on the amount you will be receiving, and find it is not enough, you have to officially apply for a change.

A tenure reverse mortgage payment, unlike a term reverses mortgage payment, will be an amount which remains unchanged and will be paid to you while you live in your home. They will continue to be paid even it means that your loan balance and accrued interest eventually total more than the appraised value of your home and should that happen, you will still never have to pay back more than your home is actually worth.

Moat people who opt for reverse mortgages take the tenure reverse mortgage payments, which will provide them with an income as long as they live, and their surviving spouses who continue to live in the family home with an income for their lifetimes as well.

With this kind of reverse mortgage payment you will never be faced with having to sell your home, and you will not have to pay taxes on the reverse mortgage payments. But the amount of your tenure reverse mortgage payment will be fixed and if you want to increase it, you will have to apply to switch to another kind of reverse mortgage payment plan.