The interest rate on Reverse Annuity Mortgages (RAMs) is usually fixed and the payments are not included. This loan is due when the home is sold or upon death of the borrower. The term may be fixed and have refinancing options.
A reverse annuity mortgage is attractive to borrowers on fixed incomes who need the equity to supplement their monthly incomes while continuing to own, live in and maintain the property. With this mortgage, the lender appraises the home and offers a loan based upon a certain percentage of the home’s current value. The payments are made directly to the borrower by the lender. The lender becomes due upon a specific date, or the sale of the property, or the death of the borrower, whichever comes first.