How is money from your reverse mortgage distributed?

With a reverse mortgage, you have a variety of options available for how the money from your mortgage loan will be distributed. Everybody has their own reasons for taking a reverse mortgage on their home when they get older, and these reasons affect the way payment takes place. Some people need money fro a large expense, while others need a monthly income.

The FHA tries to cater to people's needs by offering a variety of payment options including:

• A lump sum payment If you just want a lump sum out of your home the HECM reverse mortgage can give you a one time payment for your needs. Before you choose this option make sure that selling your home for a higher price would not be a better choice for you. By selling you home you will get the full value of your equity from the sale, and with a reverse mortgage you are giving the lender a lot of the equity in your home to cover fees, closing costs, and interest that will accrue over the life of your loan.
• A monthly cash disbursement You can keep a monthly income through your reverse mortgage for a set amount of time or as long as you own your home. If you are on a fixed income and can't keep up with inflation or make ends meet this may be a good choice for you.
• A line of credit You can have an account set up and only take money out of the equity of your home as you see necessary when you need it. This is a good option for people who have occasional monetary needs but no need for a constant income.

If you are planning on taking a reverse mortgage on your home and are considering a HECM through FHA visit the Department of Housing and Urban Development for more information before you make any final decisions.