Blog Series: Reverse Mortgage Payouts (Tenure Payment)
Senior citizens sometimes require extra income to supplement their social security, savings, and investments. Whether it’s for medical expenses, building savings, or to take up a new hobby, this extra income can be obtained through a reverse mortgage.
As discussed in our previous blog post in this series, reverse mortgages offer a range of payout methods, including the line of credit. While the line of credit can help seniors protect their investments, the tenure payment can supplement your income every month.
Tenure payments are fixed monthly payments for as long as you live in the home
Tenure payments are a monthly payment that continues for the entire time you live in your home, regardless of how long. Even if the loan balance were to exceed your home’s value, you would continue receiving the same monthly payment.
With tenure payments, you can select to receive 100% of the proceeds in the form of tenure payments, or take tenure payments along with a combination of lump sum or line of credit.
Reverse mortgage tenure payments can enhance seniors’ financial security
If you’re 62 or older and want improved financial stability, tenure payments can help you achieve this. Some of the areas tenure payments can help seniors include:
- Supplementing social security benefits
- Medical costs
- Home and auto repairs
- Travel and other lifestyle costs
- Debt repayment
Modified tenures are another option
A modified tenure allows borrowers to have a monthly income stream combined with a line of credit. For example, Robert and Susan own a home in Phoenix, Arizona and needed extra income for Robert’s in-home healthcare. They were entitled to $1,000 per month for as long as they lived in the home, but only required $500 per month. In this instance, they chose to receive $500 per month while continuing to live in their home, and left the balance in a growing line of credit. This strategy increased their monthly income and helped protect their investments.
Contact Open Mortgage to learn more about tenure payments
Tenure payments can be a powerful option for certain seniors, just as establishing a line of credit can help others. To learn about term payments, another reverse mortgage payout option, read our our next blog post in this series.
If you have questions about reverse mortgages, contact one of Open Mortgage’s friendly loan originators today!
Things to know about Reverse Mortgages:
- At the conclusion of a reverse mortgage, the borrower must repay the loan and may have to sell the home or repay the loan from other proceeds
- Charges will be assessed with the loan, including an origination fee, closing costs, mortgage insurance premiums, and servicing fees
- The loan balance grows over time and interest is charged on the outstanding balance
- The borrower remains responsible for property taxes, hazard insurance, and home maintenance, and failure to pay these amounts may result in the loss of the home
- Interest on a reverse mortgage is not tax-deductible until the borrower makes partial or full re-payment
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The payment tenure is decided based on the amount as always. But many financial institutions often times use complicated calculations which can make things harder for the common man.
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