There are a number of ways to receive the proceeds of your reverse mortgage.
Lump Sum: One payment at the time of closing.
The Lump Sum Payment option allows you to take as much as 60% of available proceeds at the closing (or the amount of all mandatory payoffs plus 10%, whichever is greater). The remainder of the available proceeds are available for withdrawal after the first year (unless you opt for a fixed rate, in which case no additional funds are paid out). The total amount available is based on Principal Limit Factors which are calculated taking in to account your age, an expected interest rate, and the value of your property, minus any mortgages or liens on the property.
Tenure: Equal monthly payments for as long as you live.
The Tenure Payment option allows you to receive a monthly benefit payment for as long as you live and continue to reside in the home. You will receive a set amount of cash each and every month from your lender. As more than 90% of reverse mortgages are those insured by the US Department of Housing and Urban Development (HUD), these payments are guaranteed by the Federal Government. If your lender goes bankrupt or fails to send your payments, the Federal Government will step in and make sure you receive all the money you are due.
Term: Equal monthly payments for a fixed period of time as decided by you.
The Term Payment option allows you to set the time period in which you will receive your monthly payments. Every month for the amount of time you selected, you will receive a payment from your lender. Typically, the monthly payment amount will be greater than the Tenure Payment, as you can select a shorter payout time period than the rest of your expected life. Again, most all reverse mortgages are insured by the Federal Government, so you are guaranteed to always receive your payment.
Line of Credit: Payments made in installments or at various times and in any amounts dictated by you.
The Line of Credit option is similar to how a conventional home equity line of credit works. Withdrawals can be made monthly, quarterly, or only when you need the funds. You direct how you receive the funds by direct deposit, wire transfer, or check mailed to you.
Any amount of the line of credit that you do not use, will continue to grow and the amount available for your use will increase over time. The growth rate of any unused line of credit can be estimated at the note rate plus 1.25%. Unlike a conventional line of credit, a reverse mortgage line of credit cannot be reduced or closed based on your use, credit, or payment history. Again, most all reverse mortgages are insured by the Federal Government, so your credit line is guaranteed to be available to you.
Modified Tenure or Modified Term: Monthly payments together with an available line of credit.
The Modified Tenure or Term Payment option allows you to combine the benefit of guaranteed monthly payments for either your lifetime or a set period of months together with a Line of Credit or Lump Sum option.