There are four choices that will allow you to access the equity in your home when you do a reverse mortgage. Let’s take a look at them so you can see how you want to use your funds:
1. Up Front Draw – Taking all the funds as a lump sum is a very common option. Since the money is yours, you are allowed to spend it on anything you please. Most commonly, the reverse mortgage funds are used to pay off your existing mortgage.
2. Monthly Annuity – Not a true annuity, but a monthly amount of money that is guaranteed to continue as long as you or your spouse lives in the home. Wouldn’t retirement be more comfortable if you had a little more money each month? There is also a tenure option that gives you a larger payment for a specified period of time. More common though, is the lifetime payment.
3. Line of Credit – In the event that you don’t need the money today, or you would like to keep in in reserve for an emergency, choose this option. No interest will be charged to you if you don’t take the money. It is only charged in the event you borrow it.
4. A Little of Each – If you don’t want to be tied down to one choice, then you can mix and match the above choices. It will allow you to have a line of credit for use later, a monthly income for life, and a lump sum withdrawal that you can use for anything you want. At any time, for a small fee, you can alter your program to tailor it to your current needs.
If you want more options than the lump sum, you will have to take an adjustable rate mortgage (ARM). The fixed rate comes with one option. You must take all the reverse mortgage equity that is available at the time of closing.
Before committing to any reverse mortgage programs, get the facts. Visit our website for more reverse mortgage information. There is also a free reverse mortgage calculator to see how much money is available to you.
