What Are The Four Ways To Use Your Reverse Mortgage Equity?
What Are The Four Ways To Use Your Reverse Mortgage Equity
?Reverse mortgages allow you to access your home equity four different ways. We will examine those ways so you know how to access your reverse mortgage equity.
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 Installments -
Sometimes retirement would be more comfortable if you had a little more money each month. The most common option is to take a lifetime payment, since it will continue for you or your spouse's lifetime, or you can pick a tenure payment which is a larger payment for a specified period of time.
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 Combination of the Above -
You can customize your loan to combine any of the above options. If you need a small lump sum, a monthly boost to your income, and you want the rest to be in a line of credit, mixing and matching is the way to go. Additionally you can alter your plan anytime you want to get more monthly or get an additional lump sum for a small fee.
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.