What are My Options for Receiving the Money?

A Reverse Mortgage Loan is very flexible.  You may choose any of five ways to have the funds disbursed to you.  All options are tax-free.

  1. MONTHLY TAX-FREE INCOME FOR LIFE:
    A monthly payment is calculated based on the amount of money for which you are eligible, the interest rate(s) at the time of the Reverse Mortgage, the age of the youngest borrower and longevity tables.  Once the amount of the monthly income has been determined you will receive the same amount each and every month until the last surviving spouse passes away – even if one or both spouses live longer than predicted by the longevity tables.  It truly is tax-free income for life!
  2. LUMP SUM CASH RECEIVED AT CLOSING:
    (Required if you take out a Fixed-Rate Reverse Mortgage)
    A lump sum amount is calculated based a formula laid out by the FHA.  The amount for which you are eligible is transferred into your bank account three days after the closing of the Reverse Mortgage Loan.
  3. MONTHLY PAYMENT FOR A SPECIFIC PERIOD OF TIME 
    Rather than receive a payment for life based on the longevity tables, you can designate a shorter period of time over which you want to receive monthly payments which will result in a higher monthly payment to you.  For example, if you knew you were going to come into a large sum of money in three years but needed funds to survive until then, you could designate the payout over three years which would result in a larger monthly payment than if you selected the Monthly Income for Life option.
  4. CREDIT LINE:
    Instead of taking monthly payments or a lump sum payment, you can choose to keep the funds in a Credit Line. The money will be available to you any time you want it by simply writing a check.  It provides a great amount of flexibility and the Credit Line never has to be repaid or “cleared out” once a year as with a conventional credit line.  In addition, it grows over time like a savings account but at a higher rate.
  5. A COMBINATION OF ALL OF THE ABOVE:
    You may choose either or any combination of the above options.  For example, you may want to take a lump sum to remodel your home, create a “rainy day” fund with a portion of the proceeds in a Credit Line and take the remainder in Monthly Income for Life.  It’s up to you.  You are in total control of the disbursement of your funds.