No reverse annuity mortgage for car
We are retired, both 75, living on social security and pension and getting along very well. But, we need a new car and are not able to afford large monthly payments. Could we ask an out-of-state savings and loan that offers a Reverse Annuity Mortgage (RAM) to advance a lump sum to buy a car? Our house is free and clear.
As I read your letter, you would like to get a lump sum under a RAM to buy a car and not pay it back. Interest on the loan would continue to build until you died or decided to sell the house. Generally, this is the concept of a RAM except that payments are intended to be monthly rather than a lump sum. An out-of-state lender would not be able to lend you money with your house as collateral as you suggest. Instead, you should inquire locally. With only a few lenders offering RAMs, I suggest you look for long-term financing from some other source. If you do not have savings or other assets you could use to buy the car, you should ask yourself if you can afford it. Perhaps you could borrow against the cash value of an insurance policy. Or, spend the principal of savings or value of stocks or bonds. If you can't afford monthly payments, you should probably consider fixing up your present car.