What are tenure payments?

They are the monthly payment option you can choose with a reverse mortgage. It means that you will receive the same monthly payment, every month for the rest of your life, no matter if your home value goes up or down, and no matter how long you live.

The Math:

HUD has calculated the number of months between your current age and the life expectancy for your age group.

HUD takes the total equity available to you, calculates the interest that the equity will earn over time as the monthly payments are made to you. In other words, the monthly payments are drawing down the equity in your home.

The basic fact is that HUD is calculating with insurance tables to keep your home at or above the loan value at the time of your death. If they fail to calculate correctly, your estate can simply turn a home into a bank that is worth less than the value of the reverse mortgage. In that case the bank or HUD has to pay the difference once the house is sold.

Some seniors like the security of the tenure monthly payments. Anyone who has been falling short on monthly bills is likely to choose this so they never have to face that again.

Having said that, I know how fast the credit account grows if the senior leaves the money in the insured account rather than getting the money out. Today I showed a senior that establishing a credit line of $154,000 would net them over $9,000 a year in interest.

Thats right, that little 1/2% interest credit facility, because it compounds daily, nets them $9,000 per year in growth on the $154,000 credit line. Once they have waited a year, with no mortgage payments, they can start pulling out $9,000 per year, TAX FREE.

So while I understand the need for a senior citizen to feel secure, I never forget to tell them how leaving the money in the insured credit line, as long as they can hold on for a year, can give them a good monthly income without having their equity decrease.

Bob
bob@az62.com
www.az62.com
888-277-4990