How a Combination Payout With A Reverse Mortgage Works

When it comes to finances a reverse mortgage is something that more people than not consider. That being said, a reverse mortgage is basically a lump sum loan against the value of your home or estate that is not payable until you either move or pass away. This is a common type of mortgage with older people that are retired and no longer have a steady income.


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There are a few different ways that reverse mortgages pay out and one that is fairly common and popular is a combination payment system. This means that the money that you get for your home is not given in one manner. In most cases a combination payout will be a lump sum accompanied by a monthly stipend or payment. In most cases, the lump sum is a fraction of what the total mortgage is going to be.

One possible example would be if a home is assessed at $150,000. The person taking out the mortgage would not get the full $150,000 mortgage at once but would rather get a fraction and monthly payments. A feasible and common fraction would be one third of the total value of the mortgage. This would be about $50,000 then monthly payments on the remaining amount.

This would be tantamount to a pay off accompanied by a monthly salary. This is an option that most people choose as it does allow some upfront money but also adds the security of monthly payments. Those that take a combination option may also opt for a fund account in which monthly payments are made but from which lump sums can be taken for things like repairs, large bills, and unforeseen circumstances.

Gina Wilson

Another post from Gina Wilson – Credit & Loans Specialist Blogger.