In a few words... Any Way You Want!
However, let's explore the ways that the funds can be taken, since that impacts the cash available and thus spending choices.
Lump Sum: The first choice is to take all the available funds at once. This is the option chosen when there the mortgage amount owed on the property is close to the amount of reverse proceeds available. For many folks, just paying off that existing mortgage and putting that monthly mortgage payment back in their pocket is a life changing thing.
Line of Credit: The second option is a line of credit that remains within the reverse mortgage. This line is accessible any time the borrower needs it and in any amount. A significant benefit to the FHA HECM reverse mortgage is that the line of credit contains a "growth" factor. Simply put, the unused portion of the line of credit grows- that's right- it actually increases each year. Think of it as a growing nest egg for future needs.
Monthly Draw: The third way to take reverse mortgage funds is by way of a monthly draw. Each month, a predetermined amount is disbursed to the borrower(s) as long as one of them lives in the home as the primary residence. This is called "tenure". The borrower(s) may also opt for a "term" amount. Let's say that the senior only plans to live in the home for 10 years. The funds are calculated so that at the end of 10 years, the disbursements will stop. Remember, just because the funds stop, the borrower does not need to vacate the home. It is still the residence and can continue to be occupied.
To top this all off, the funds can be taken in any combination of the above: small lump sum combined with line of credit, monthly amount combined with small lump sum, etc. And even better, at the borrower(s) request, the plan can be changed. Clearly the reverse mortgage is set up to allow the senior to have both the benefit of the funds and control of their distribution.
For more information on the California Reverse Mortgage Lender, Academy Mortgage, contact gplum@academyloans.com, or 877-240-7020.
Comments(0)