Reverse Mortgage Proceeds – Six Flexible Options
As a homeowner aged 55+ in California, with substantial equity in your primary residence, the Home Equity Conversion Mortgage (HECM) offers you several ways to receive your loan proceeds. The U.S. Department of Housing and Urban Development (HUD) regulates HECMs and provides six distinct options to suit your financial goals and needs. Here’s a breakdown of Reverse Mortgage Proceeds – Six Flexible Options:
Adjustable-Rate Payment Plans
Five of the six reverse mortgage payment plans come with adjustable interest rates, which are capped to ensure stability:
Annual rate adjustments are limited to a 2% increase.
Lifetime rate increases are capped at 5% above the initial rate.
This means your equity is protected, even with fluctuating interest rates.
The Six Payment Plan Options:
1. Tenure Payment Plan
You’ll receive equal monthly payments for as long as one borrower lives in the home. This plan is calculated to a lifespan up to age 100, ensuring a steady income for the long term. Ideal for those planning to stay in their home indefinitely.
2. Term Payment Plan
Receive equal monthly payments for a set period, such as 10 years. Best suited for homeowners with a clear idea of their residence duration, particularly those planning to relocate or downsize in the near future.
3. Line of Credit
Access funds as needed, with the flexibility to decide when and how much to withdraw, provided it’s within your principal limit. This plan offers maximum flexibility for managing unexpected expenses or emergencies.
4. Modified Tenure Plan
Combines fixed monthly payments with a line of credit, offering steady income while retaining access to additional funds. Payments and credit lines are smaller compared to selecting either option individually but provide a balanced approach to financial flexibility.
5. Modified Term Plan
Receive fixed monthly payments for a specific term along with access to a line of credit. Similar to the Modified Tenure Plan, this option balances steady payments with flexible access to additional funds over a set period.
6. Fixed-Rate, Lump-Sum Payment
Receive a large, one-time payment at closing with a fixed interest rate. This plan is straightforward, providing a lump sum immediately but with a higher initial interest rate compared to adjustable plans.
Choosing the Right Plan:
The best plan for you depends on the unique situation of the senior and financial needs. While each option has its benefits, the Line of Credit is often favored for its flexibility and potential interest savings, as it allows for both regular withdrawals and emergency funds.
Bottom Line:
HECMs offer a variety of payment plans to cater to diverse financial needs of senior homeowners. Whether you prefer steady monthly payments, access to a flexible line of credit, or a one-time lump sum, there is a suitable option for you. If you choose one option and decide later it is not of best benefit to you, you can change the way proceeds are paid out to you.
So there you have it, Reverse Mortgage Proceeds – Six Flexible Options.
Interested in learning more about how a HECM can help you in retirement?
Contact me today for a detailed consultation and let me help you navigate your reverse mortgage options and to determine which plan aligns best with your goals:
Contact me today to learn more:
Jeff Markell NMLS# 224196
Grandpa Mortgage – U.S. Air Force Veteran
Reverse Mortgages – Mortgage Broker In OC
(714) 614-4040
jeff@empirehomeloans.com
Empire Home Loans, Inc. NMLS# 1839243
Serving all of California
www.mortgagebrokerinoc.com
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