The reverse mortgage is a relatively new concept that's still being tweaked and refined as new products trickle out from various lenders. Last year, a new design was introduced separately by two California companies -- Financial Freedom Senior Funding Corp. in Irvine and Transamerica HomeFirst in San Francisco. These companies offer qualifying seniors the option of obtaining a lump-sum reverse mortgage with the funds used for an immediate-paying lifetime annuity. 

The primary advantage of this approach is that payments will continue for life even if the senior sells the home or moves out. With a conventional reverse mortgage, payments will be stopped if the senior sells the home or moves out of the home for at least 12 months Of course, you don't really need a combination reverse mortgage and annuity program to achieve this benefit because any lump-sum payment on any reverse mortgage could be applied to a separately purchased immediate annuity. Consult a qualified advisor for details.

Source: Ron Panko, "A New Way to Loosen Equity," Best's Review, February 1997.

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