It is important to fully understand the details and to have a good idea of how long you can use the equity at the proposed rate of withdrawal. Knowing all the facts is always the best advice. Make sure you talk with others before committing to the mortgage. The most common Reverse Mortgage currently available is the Reverse Annuity Mortgage. The home owner borrows a lump sum using current equity.
Interest is charged on the lump sum which used to purchase an annuity.
The annuity gives the borrower monthly payments for the rest of the borrower's life. 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. This method is best for people who want to top up an existing monthly income with a bit extra. The Annuity purchase can be relatively expensive because of the interest. . Another type of Reverse Mortgage is the Line of Credit Reverse Mortgage.