January, 2020 | Reverse Loan Consultant

January 2020

January 21, 2020 Reverse Mortgages No Comments

Options for Receiving Money in a Reverse Loan

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.

January 10, 2020 Reverse Mortgages No Comments

Payment Choices for Reverse Loans

The FHA Home Equity Conversion Mortgage is a reverse loan and along with its many features for seniors, are different ways they can access their funds in the line-of-credit. They can choose to not take any kind of payment and simply take out some money at the close of escrow, or do a combination of the different options.

Cash at the close of escrow with a “tenure” payment.
Tenure payment only
Modified Term payment and if they want it, cash at the close of escrow.
Or no payments at all. But payments can be set up later if the borrower wishes to have one at any time in the future, as long as there are remaining funds in their account.

Very few of my clients have ever opted for any kind of monthly payment, but let’s take a look at what a Modified Term Payment is.

The borrower chooses a certain amount of money to be sent to them each month, such as $2,000 for 10 years. Depending on the age of the youngest borrower and how much money is available in their account, they will receive it each month but not for their lifetime.

At some point in the future, it will stop being sent to them, (10 years in this example) but if they still have money in their account, they can set up a new monthly payment, a tenure payment or stop it altogether or request a lump sum. Again, it depends on how much reserve they have in the line-of-credit.

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Every person has their own unique concern or goal and depending on a number of factors, such as paying off a large mortgage, there may not be enough money left in the account to choose a payment option, but at the least, they will have eliminated their mortgage payment and that would become extra income to them each month.