What is a Reverse Mortgage? – Options

Options for Withdrawing Your Money



One of the best features of the HECM program is that borrowers are given a great deal of flexibility in how they receive the proceeds of the reverse mortgage.

There are absolutely no restrictions on how reverse mortgage proceeds can be used. Some of the most common uses for reverse mortgage proceeds are to cover every day expenses, home improvement, health care, major purchases and travel.



    There are four basic options to receive proceeds from reverse mortgage:
    • Withdraw a lump sum of cash when the loan closes.
    • “Tenure” annuity - Receive a monthly annuity for as long as the borrower lives in the house.
    • “Term” annuity - Receive a monthly annuity for a set period of time chosen by the borrower.
    • Take out a line of credit that can be used at the borrower’s discretion. This credit line actually grows with the passage of time.
    • Any combination of those listed above.

Of course, a senior obtaining a reverse mortgage can also choose to combine multiple options into a plan that best suits his or her needs. For example, a senior could choose to take out a certain amount of cash at closing while also receiving an annuity.

There is also significant flexibility with changing from one option to another over time. For example, if a borrower receiving an annuity wished to switch to a line of credit instead, he or she could do so by paying a small fee.