So even when the home is sold and the Reverse Mortgage is paid off, the home owner still owns the annuity and the payments will continue. Reverse Annuity Mortgages are best for people who want the security of a monthly income for the rest of their lives. Because the income from an annuity, borrowers should make themselves aware of the various types of annuities on the market. These plans can be relatively expensive, as the lump sum that is initially withdrawn is large, and interest compounds on that amount quickly. Another type of Reverse Mortgage is the Line of Credit Reverse Mortgage.
Interest is calculated on the total amount withdrawn.
Line of Credit Reverse Mortgages are ideal for people who only want to withdraw money when they need it. This keeps interest charges to a minimum. Fixed Term Reverse Mortgages provide money for a specific amount of time, often from five to ten years. After the term is over, the entire loan plus interest must be repaid, even if it means selling the house to do so. Interest builds on that money for five years, at which time the entire amount must be paid back.