Types Of Payments For A Reverse Mortgage

Reverse mortgages are popular because they offer a variety of cash options where the borrower can receive the money. Since the loan is taken out against the existing positive equity of the home, the lender can afford to be flexible as far as the payment options are concerned. After some research, we discovered that reverse mortgage borrowers have five options for receiving the money:

Tenure - This constitutes of equal monthly payments that endure as long as at least one borrower lives in the said premises as the primary residence and continues to make good on the estate taxes, utlitities and general maintenance of the property.These payments will continue as long as the borrower lives.

Modified Tenure - Some borrowers elect to have a combination of line of credit with monthly payments. These are called modified tenure payments and also continue for as long as the borrower remains in the home as the primary residence.

Term payments - In term payments, the lender makes equal monthly payments for an agreed fixed period of months and these payments cease when the time elapses. The borrower is still eligible for estate taxes and other costs of occupancy but these are not conditional to the loan.

Line of Credit - This form of payment is popular because it maximizes the amount that the lender is paying. These payments are disbursed until the line of credit is exhausted.

Modified Term - This form is similar to the modified tenure only that the payments, as in the case of term payments, continue until the expiration of the agreed term. This is also a combination of line of credit with monthly payments for a fixed period of time agreed between the borrower and the lender.