Structured Settlements

Structured Settlement And Reverse Mortgage - General Considerations


With a structured settlement and reverse mortgage, you can tap into income that can out live your financial responsibilities. They can help you have peace of mind. There are some important considerations with structured settlements and reverse mortgages. Taking some time to understand what they are can help you make the right financial decision for your life.

What Is A Structured Settlement?

A structured settlement is a deferred payment obligation resulting from the settlement of a personal injury claim. In many cases these structured settlements are paid out over time. With a structured settlement, the payments are scheduled up front. This can provide a steady source of dependable and predictable income for the rest of your life. A structured settlement annuity issuer guarantees payments in terms of the structured settlement agreement to the injured party. The payment and schedule are fixed. The income from a fixed annuity is tax free, if the income is the result of personal physical injuries or a physical illness. With a structured settlement, a fixed annuity contract is issued by a life insurance company. The assets are invested in the insurance company's general account.

What Is A Reverse Mortgage?

The most common type of reverse mortgage is a reverse annuity mortgage that was developed by HUD. You have to be 62 years of age or older. You also have to live in the home and must have the mortgage paid off with this type of program. The government is responsible to insure your mortgage. Reverse annuity mortgages have been created to help ageing citizens to be able to tap into the equity of their paid off home. Sometimes a homeowner can qualify if there is enough equity in the home, even if it is not completely paid off. With this type of reverse mortgage, the homeowner can receive a tax free payment each month. The mortgage is paid off when the home is latter sold. In some cases, the reverse mortgage funds can be paid to a qualified person in a lump sum. A qualified homeowner can also use the option of a line of credit. Generally the amount that you qualify for will be based on your age, the equity in your home, and the amount of the interest rate the lender charges.

Watch Out For Structured Settlement And Reverse Mortgage Scams

With both a structured settlement and a reverse mortgage, you should always beware of scams. When there is large amounts of money involved, there can be unscrupulous people who may take advantage of the elderly. Be sure to do your homework and search online for the best resources and information available to you. It is best to retain an attorney for any type of financial decision you make to explain all the options and terms in regards to structured settlements and reverse mortgages.