Reverse Mortgage Payment Options

In selecting how you will receive funds from your reverse mortgage, you have a number of options to consider:

• Lump Sum Payment: You can receive the maximum allowable balance all at once in a lump sum payment. Beware of using this option if you are on Medicaid, as it could create an asset that counts against Medicaid eligibility if not spent immediately.
• Fixed Monthly Payments: Your reverse mortgage representative can set you up to receive a fixed monthly sum that can supplement other forms of income, giving you extra spending money each month. You have the option of a fixed monthly sum that lasts for a specific amount of time (the "Term" option) or, alternatively, a different amount for however long you live in the home (the "Tenure" option). If you opt for the "Term" option, you will receive a higher monthly payment than under the "Tenure" option. Under the "Tenure" option, you continue to receive monthly payments as long as you live in the home, even if your payments ultimately exceed the value of your home.
• Line of Credit: This tends to be the most popular option, as it allows you to draw on your reverse mortgage on your own schedule -- dry powder for when you need extra cash. The HECM line of credit option also has the benefit of a growth feature whereby the unused balance of the line of credit grows each year as your home appreciates and you get older.
• Modified Term: This reverse mortgage provides for a fixed monthly payment for a predetermined amount of time, in addition to the added flexibility of access to a line of credit for use during months when your cash requirements in a given month exceed your fixed monthly reverse mortgage payment.
• Modified Tenure: Similar to the Modified Term reverse mortgage option, this option allows you to receive fixed monthly payments which instead last as long as you live in your home (rather than for a pre-determined number of months). In addition, you will receive the added flexibility of access to a line of credit for use during months when your cash requirements in a given month exceed your fixed monthly reverse mortgage payment.