There are four different Reverse Mortgage distribution payment options that borrowers have when using this program. The reverse mortgage is a completely flexible type of product and it seems almost willing to bend over backwards to help out senior citizens, the age of 62 and older. The different types of payment plan options are the lump sum, the tenure plan, the term option or a line of credit. Let’s break down each into more detail.The Lump Sum - Reverse Mortgage Distribution Payment Options
Essentially, this is the most straightforward of the payment options. If you choose the lump sum, you will receive all of the proceeds upfront. But at that point, you have exhausted all of your proceeds immediately. This option can come with a fixed rate or as a variable rate loan. While some homeowners may find this option to perfectly suit them, others may be looking for different payout plans.
Tenure Plan - Reverse Mortgage Distribution Payment Options
This payment option will guarantee equal monthly payments for as long as the borrower maintains residency of the property. For example, even if the borrower took out a reverse mortgage at the age of 62 and chose the tenure plan and they lived to be 100 years old, the lender would still payout the equal monthly payments, just as they would from the beginning. This option is the most conservative of the options, but this may be the perfect option for some borrowers as well. This option only comes as a variable rate loan.
Term Option - Reverse Mortgage Distribution Payment Options
The term option plan allows the borrower to choose the monthly payment plan for a fixed or set number of years. For example, you may want to draw a monthly payment for 20 years and then after that time you would no longer receive monthly payments. But you would still not owe anything on the loan until you were to move out of the home permanently or pass away. This option only comes as a variable rate loan.
Line of Credit - Reverse Mortgage Distribution Payment Options
With a line of credit, you would be able to access the equity in your home anytime you wish until the line of credit is exhausted. The pros of this type of payment option is that you can draw as little or as much as you want at a time, it is completely up to you. This type of payment option only comes as a variable rate loan.
Bonus Option - Reverse Mortgage Distribution Payment Options
There is a fifth option available, which is a combination of any of the above payment plans. Some borrowers need or want a combination of the payment plans because they may need to pay off debt, but would also like a line of credit open to them for emergencies or other various reasons.
With the reverse mortgage payment options, there are almost unlimited amount of choices and combinations when it comes to choosing which plan best suits your needs.
http://www.reversemortgageloanfinancing.com/2013/07/08/reverse-mortgage-distribution-payment-options/
With the reverse mortgage payment options, there are almost unlimited amount of choices and combinations when it comes to choosing which plan best suits your needs.
http://www.reversemortgageloanfinancing.com/2013/07/08/reverse-mortgage-distribution-payment-options/
Reverse Mortgage Distribution Payment Options
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Reviewed by Merlyn Rosell
Published :
Rating : 4.5
Published :
Rating : 4.5