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Reverse Mortgage Payment Options

Payment Option
Definition

Pros

Cons

Line of Credit-You access funds at your discretion.

1) Flexibility-You can access funds as needed.

2) Growth feature-The unused balance grows. This does NOT mean you are earning interest. The growth factor takes into consideration that your home has appreciated in value over the past 12 months and that you are one year older.

1) The funds in the line of credit can be exhausted. If that happens, one option may be to refinance your reverse mortgage to gain access to additional funds.

2) To access funds, you must submit a written request to the loan servicer managing your account.

Term-You receive fixed monthly payments for a set period of time.

1) Funds can be automatically deposited into your bank account.

2) You receive larger monthly advances compared to the Tenure payment option.

1) The amount of funds you receive each month is fixed, so if you need additional funds, you will have to request a payment plan change.

2) Monthly advances are not indexed for inflation.

Tenure-You receive fixed monthly payments for as long as you live in the

home.

1) The monthly advances continue for as long as you live in your home, even if the total amount you receive exceeds the value of your home. Despite this, you will never owe more than what the home is worth.

1) The amount of funds you receive each month is fixed, so if you need additional funds, you will have to request a payment plan change.

2) Monthly advances are not indexed for inflation.

Modified Term-Fixed monthly payments for a set period of time, plus access to line of credit.

1) Provides two sources of available funds.

2) Combines Term and Line of Credit Advantages

1) You receive smaller monthly payments because a portion of your equity has been set aside in the line of credit.

Modified Tenure-Fixed monthly payments for as long as you live in the home, plus access to line of credit.

1) Provides two sources of available funds.

2) Combines Tenure and Line of Credit Advantages

1) You receive smaller monthly payments because a portion of your equity has been set aside in the line of credit.


Category: Reverse mortgage

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