The FHA HECM reverse mortgage is a Line-of-Credit that allows the homeowner and borrower three options to receive their money. It is very flexible and the borrower can change the terms at any time they may want to, but what are they?
One option ( and most borrowers will choose this), is to have money wire transferred to their checking account when the loan closes and funds.
Or they may wish to receive a tenure payment that will be funded to them every month for the rest of their lives.
Or a Modified-Term payment that I discussed in the previous post. Regards of which option may be used, they all can be changed at any time or do a combination of them. Whenever the borrower wants to make a change or receive additional funds from their account, all they have to do is contact the Loan Servicer and for a small fee of $25-$30 they can request a change.
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Maybe they want to receive their money every month for the rest of their lives. This would be the Tenure option and it will continue to be deposited into their account indefinitely as long as they occupy the property. Even if the funds in the reverse loan are exhausted.
Regardless of which option or combination a borrower may utilize, the borrower is required to live in the home, pay the property taxes and Homeowners Insurance and keep their home in good repair.
And what is the most common choice used? Cash at the close of the loan and request funds from the Line-of_credit when they want more money in the future.