What Is A Reverse Mortgage? (Part 7)

What Is A Reverse Mortgage? (Part 7)
A 12 Part Series

Part 7 - Loan Limits and Distribution of Money of Reverse Mortgages

The maximum loan amount that is available through a reverse mortgage depends on five factors: 

• the age(s) of the homeowner(s) - the older, the better;
• the current interest rate - the lower, the better;
• the appraised value of the home - the higher, the better;
• the remaining mortgage balance (if any) - the lower, the better; and
• location - which you can't do anything about.

Distribution of Money from a Reverse Mortgage

There are several ways to homeowners can receive the proceeds of a reverse mortgage. Homeowners can mix and match as needed.

You have five options:

• Tenure - equal monthly payments as long as at least one borrower lives and continues to occupy the property as a principal residence.
• Term - equal monthly payments for a fixed period of months selected.
• Line of Credit - unscheduled payments or installments at times and in amounts of your choosing until the line of credit is exhausted.
• Modified Tenure - combination of line of credit with monthly payments for as long as you remain in the home.
• Modified Term - combination of line of credit plus monthly payments for a fixed period of months selected by the borrower.

Next - Part 8 - Using a Reverse Mortgage to Purchase a Home

Part 1 - Definition of a Reverse Mortgage
Part 2 - Reverse Mortgage Eligibility Requirements
Part 3 - Myths and Frequently Asked Questions of Reverse Mortgages
Part 4 - Pros and Cons of a Reverse Mortgage
Part 5 - Reverse Mortgages, Income and Taxes
Part 6 - Outliving the Reverse Mortgage

If you're 62 or older and are looking for money to finance a home improvement, pay off your current mortgage, supplement your retirement income, to pay for healthcare expenses, or even to buy your retirement home, then consider getting a reverse mortgage. Find out how a reverse mortgage can use the equity in your home to pay you.