Reverse Mortgage Payment Choices and Options
Reverse Mortgages are special loan programs which allow Seniors to stay in their homes and access their home equity. With a Reverse Mortgage the Bank pays you versus you paying the Bank.
The payment choices are options on how you would like to receive your money versus payments you make to the Bank. You do not make any payment to the Bank until you permanently leave your home.
The payment choices vary between Reverse Mortgage programs, but basically they are:
Lump Sum Payment
Lump sum is the money you receive at closing. You can receive part or all of you loan amount at closing. The questions in deciding what you wish to receive at closing include:
- Do you need a large sum of money for home improvements?
- Do you need a large sum of money to pay off debts?
- Do you need a large sum of money to buy a second home?
- Do you need a large sum of money to give as a gift?
Tenure Payment Plan
The Tenure payment is a monthly payment to you for as long as you live in your home. The questions in deciding what you wish as a tenure payment include:
- Do you want or need extra monthly income for as long as you remain in your home?
- Do you hope to remain in your home for life?
- Are regular, long-term monthly payments more important to you than the highest possible monthly payment you can receive?
Term Payment Plan
The term payment plan is monthly payments for a time period you choose. By limiting the time period you are receiving your payments you can increase the amount of the payments versus the tenure payment plan which is for life. The questions to ask if a term payment plan is for you include:
- Do you need extra monthly income for a fixed period of time?
- Do you plan to sell your home and move to other housing at a future time?
- Do you wish to receive the highest possible monthly loan payment?
Line of Credit
A line of credit plan is similar to a traditional equity line. You pull out money from the line when you need it. The difference is that with a traditional equity line, you need to make payments to the Bank every month. Most traditional equity lines also have credit and equity qualifications you need to have to be eligible. With a Reverse Mortgage Line of Credit you make no payments to the Bank until you permanently leave your home.
A line of credit is perfect for an emergency fund in case you need a new roof or medical care. You can also convert you line of credit into a monthly payment plan, should you need regular monthly income in the future.
The questions in deciding about a line of credit include:
- Would you prefer to request a loan advance when you need it rather than receive monthly payments?
- Does your income vary significantly from month to month?
- Do you need extra money from time to time for property taxes or vacations?
- Do you worry about your ability to pay for emergency and unexpected expenses such as health care or home repairs?
Combination of Payment Plans
The Home Equity Conversation Mortgage (HECM) and Home Keeper Mortgage programs allow you to combine these plans.
Thus you can take some money at closing, have a monthly payment, and have a credit line for emergencies.
Your Reverse Mortgage Specialist will help you decide which plan or combination of plans best meets your needs and goals.
Mortgage Trust Group, Inc.
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