How Are Funds Disbursed with an FHA-Backed Reverse Mortgage?
How do you get your money with an FHA-backed reverse mortgage? Actually, there are several different options available to you, and the type of loan you choose (adjustable rate or fixed rate) will affect your disbursement options.
Reverse Mortgage Disbursement with a Fixed Rate Loan
With a fixed rate loan, you are limited to just one option – a lump sum of money delivered at the time of closing. This is identical to the way that proprietary reverse mortgages (non-government backed) work. The primary benefit of this option is that it gives you all of your money at one time, which makes it well suited to situations in which you need a large amount of capital on hand, rather than an ongoing stream of income.
Reverse Mortgage Disbursement with an Adjustable Rate Loan
If you choose to go with an adjustable rate loan, rather than a fixed rate loan, there are multiple disbursement options open to you. These are as follows:
Equal monthly payments delivered as long as one borrower on the loan application is alive and living in the home as their primary residence (called tenure)
Equal monthly payments for a set period of time, usually a specific number of months (called term)
Access to funding that can be drawn on as needed, without set amounts or payment periods, and accessible at your discretion (called a line of credit)
Scheduled monthly payments for as long as you are in the home, plus a line of credit (called modified tenure)
Monthly payments for a set period of time plus a line of credit (called modified term)