Reverse mortgage annuity options

Part 3: State of the 'reverse' market

Some seniors who have most of their equity in their home want the security of a fixed lifetime annuity, and don’t care about not leaving any equity behind for their heirs. A Home Equity Conversion Mortgage, or HECM, which is insured by the Federal Housing Administration, can fund the purchase of a lifetime annuity in two ways.

One way is for the senior to exercise the "tenure" option under the HECM program, and receive a fixed annuity payment for as long as he remains in the house. The second way is for him to exercise the credit-line option under the HECM program, drawing the maximum amount permitted, and use it to purchase an immediate annuity from a life insurance company.