11 Strategic Use of a Reverse Mortgage

Upon expiration of the 3 day rescission period, the loan funds are disbursed. The homeowner accesses the funds in the form of the payment option selected. Any existing debt on the home is paid off. A new lien is placed on the home. The homeowner may use the loan proceeds for any purpose. (There is no rescission option on a HECM for Purchase Reverse Mortgage).

You can choose to receive the money from a reverse mortgage all at once as a lump sum, in fixed monthly payments either for a set term or for as long as you live in the home, as a line of credit, or as a combination of these. 

If you select fixed payments, you loan Servicer will disburse them on the first business day of each month.

As a borrower, you have the right to change your payment plan at any time. You simply request a new Payment Plan Agreement form from your Servicer. A change may include a small administrative fee of no more than $20.  Once the agreement is executed, the new payment plan will go into effect the first business day of the next month. 

So it follows that in most circumstances, the option of obtaining a Reverse Mortgage is a strategic decision. The motivations for such a mortgage product are as varied as are homeowners themselves. Some wish to extinguish their existing forward mortgage, while others may need the proceeds from the equity of their homes to pay off substantial debts, including tax liens. Still others wish to obtain extra income for home improvements, vacations, major purchases, or just a feeling of greater financial security. Be sure to tell your HECM professional of your reason(s) for interest in a HECM loan so that he or she may best guide you to the program most suited to your needs.