Define: Reverse Annuity Mortgage

A reverse annuity mortgage, also known as a reverse mortgage, is a loan product specifically designed for senior homeowners. It allows them to convert a portion of their home equity into cash, which can be received as a lump sum, monthly payments, or a line of credit.

With a reverse annuity mortgage, the homeowner receives payments from the lender instead of making monthly mortgage payments. The loan is repaid when the homeowner sells the property, moves out, or passes away. The amount owed increases over time as interest accrues on the loan balance.

To be eligible for a reverse annuity mortgage, you must be at least 62 years old and own a home that is your primary residence. The home must also meet certain criteria, such as being in good condition and having sufficient equity.

The amount of money you can receive from a reverse annuity mortgage depends on various factors, including your age, the value of your home, and current interest rates. Generally, the older you are and the more valuable your home, the more money you can receive.

No, the money received from a reverse annuity mortgage is typically considered a loan advance and is not subject to income taxes. However, it is advisable to consult with a tax professional to understand the specific tax implications in your situation.

You cannot lose your home with a reverse annuity mortgage as long as you continue to meet the loan obligations, such as paying property taxes, homeowners insurance, and maintaining the property. The loan is typically repaid when the homeowner sells the property or passes away.

Yes, you can use the money from a reverse annuity mortgage for any purpose you choose. Whether it’s to cover daily living expenses, medical bills, home renovations, or travel, the funds are yours to use as you see fit.

Yes, you can still leave your home to your heirs with a reverse annuity mortgage. However, they would need to repay the loan balance to keep the property. If the loan balance exceeds the value of the home, they can choose to sell the property and use the proceeds to repay the loan.

Yes, it is possible to refinance a reverse annuity mortgage. Refinancing may be beneficial if interest rates have significantly decreased or if you want to change the payment structure of your loan. However, it is important to carefully consider the costs and potential benefits before refinancing.

If you outlive the loan balance with a reverse annuity mortgage, you can continue to live in the home without making any further payments. The loan is typically repaid when the homeowner sells the property or passes away, and any remaining equity in the home would go to you or your heirs.