of the earned equity is given to the homeowner at the closing of the reverse mortgage.
Line of Credit - Upon completion of the reverse mortgage, homeowners have access to all of the equity earned in the home in the form of a line of credit that can be accessed at any time.
Tenure - With tenure, homeowners receive fixed monthly payments. Tenured payments under the FHA/HECM program are guaranteed for life and can never terminate, regardless of equity position.
Modified - Homeowners can modify the way they receive money by using combinations. For example, homeowners can receive a lump sum of cash at closing and put the balance on a line of credit. Or, homeowners can receive cash at closing and receive the balance in monthly payments. Monthly payments can be set up for a specific term, which allows for higher monthly income, or they can be set up as tenured payments. All combinations are possible, cash at closing, line of credit and monthly payments.
How Do Reverse Mortgages Impact The Kids?
By taking out equity in the home during years, there will certainly be less to pass on in the form of an estate. However, reverse mortgages allow homeowners to live financially independent of their children during years. With the rapidly increasing cost of living, more and more retirees are finding themselves in the uncomfortable situation of having to ask for financial assistance from their children. This puts children in a difficult position as well; not wanting to deny parents of aid, but likely struggling with their own financial burdens. So while children may receive less in the form of an estate after the death of their parents, they can rest assured that their parents are financially secure during their years.
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