Reverse Mortgage Equity – There Are Four Ways to Get It
By David Prulhiere
If you are considering a reverse mortgage you should know that there are four ways to get the money that is coming to you. Knowing all of your options will allow you to pick the best option for you. The program you choose could also dictate if you have to take an adjustable rate mortgage (ARM) or a fixed rate.
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. You can choose an ARM or a fixed rate for this plan.
2. Monthly Payments – Payments to you that is. The two options are payments that continue for a specified amount of time or a lifetime payment. Since the lifetime payment continues for both your and your spouse’s lifetime, it is the most common choice. This option does not allow for a fixed interest rate. An ARM is all that is available.
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. ARM only on this on too. No fixed interest rates on the line of credit.
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. By combining the above options, you are by default going into an adjustable rate mortgage.
In the event you want an option other than a lump sum, know that you must take an adjustable rate mortgage (ARM). When choosing the fixed rate reverse mortgage, there is only one option – you have to take it all when you close your loan.
Prior to committing to any reverse mortgage programs, get the facts. Visit our website for more reverse mortgage information. We have a free reverse mortgage calculator to see how much money is available to you.
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