REVERSE MORTGAGES: How to Take the Cash
A guide to reverse mortgage distribution options
BY:CATHIE GANDEL
Many borrowers use a combination of these plans, at first taking a portion of the loan in a lump sum, then distributing the remainder through monthly payments, a line of credit or both.
Lump Sum
Pro:
Entire amount available at once
Con:
May impact SSI and Medicaid
Interest to be paid on a large sum
Monthly Payment
Pro:
Automatically deposited, fixed monthly payments
Con:
Requires written request for additional funds
Could impact SSI and Medicaid if funds remain in your bank account beyond the month in which they were distributed
Line of Credit
Pro:
Most flexibility, with funds accessible on an as-needed basis
Unused balance increases by the loan's percentage rate
Con:
Requires written request for additional funds