Reverse Mortgages: What You Need to Know About Reverse Mortgage Payment Options

Perhaps, one of the best assets of the reverse mortgage is that is offers great flexibility to those who will be qualified or eligible for the loan. There are a good number of options offered to qualified applicants in terms of the type of loan product that fits to them, the most favorable interest rates, and even the method of payment they feel comfortable with. At the present time, Home Equity Conversion Mortgages or what is commonly known as HECMs is offering three kinds of primary payment modes. These are the lump-sum payout method, monthly installment payout method, and a credit line payout method. See the best information about the reverse mortgage lender.

Furthermore, the flexibility of the reverse mortgage payment option is not only evidenced by the number of payout options available but in the fact that seniors may actually choose to put together or combine the three options to form out a suitable payout mode. For instance, an approved borrower may desire to receive half of the reverse mortgage income in a lump-sum way and half of it as a line of credit. This type of payout method is called as modified tenure.

More Information About Reverse Mortgage Payment Selections

According to the reverse mortgage trends, around 70% out of all the qualified senior applicants are choosing a fixed-rate loan released through a lump-sum payout mode over the other kinds of loan products and payment options. There is quite a good number of reasons behind this. The basic reason behind this is the fact that people feel a sense of security when they are sure their interest rates will remain the same throughout the loan's life. Check out the HECM calculator.

More than that, seniors become interested in the lump-sum payout method because this allows them to receive the money in full and use them right away to settle existing debts. After all, the reverse mortgage loan should be in the primary lien position, so all other debts having a claim on the property must be written off. This is one of the big reasons why many borrowers really prefer the lump-sum method.

On the contrary, borrowers who are only obliged to pay a small amount of mortgage balance find the line of credit option as a better one. What is great about a credit line is that a borrower has the chance to avail the growth offer of a reverse mortgage wherein he or she can borrow more when his or her equity in the home also increases. With this, seniors may be able to borrow different amounts according to will and the need of time.

When you talk about monthly payments, they come in two kinds, namely the tenure and the term. Learn more about reverse mortgage at http://www.reversemortgagelendersdirect.com/how-does-a-reverse-mortgage-work/. Term means that a borrower will receive monthly payments within a specific term while tenure means that a borrower will continue receiving monthly payments as long as he or she stays in the home.