What are your Options for Reverse Mortgage Payout?

Getting a reverse mortgage can be an excellent opportunity for senior citizens to have a supplemental income, but you should know that there are many conditions you should meet before you are approved for one. When you do get qualified, however, the next question you might be asking is which payout method you should prefer. Here are some comparisons among three options:

Lump Sum

The main advantage of taking a lump sum is that you get all you are entitled to in one sitting; no more waiting for monthly payouts and keeping it stashed away for a rainy day. However, this fact in itself presents a problem; if you happen to spend it all in one place, you’ll have nothing left.

All In: Taking Out a Reverse Mortgage

Homes paid for through mortgages usually hold equity, and the values for this figure build over time. Homeowners that reach a ripe old age can borrow the amount of equity their houses have accrued in the form of a reverse mortgage. As its name implies, a reverse mortgage makes it seem like it’s the lender’s turn to pay back the borrower.

To take out a reverse mortgage, homeowners need to meet strict requirements put forth by the industry. Aside from an age restriction that only allows those 62 years old and above, the borrower also needs to have the means to pay off any remaining loans or has already fulfilled his debts. The property of the individual taking out a reverse mortgage must naturally be under the ownership of the borrower, and it should also be the primary residence.