Once you borrow against the equity in your home via a reverse mortgage, you will receive payments rather than making them and you have a number of options including monthly payments (as long as you still own the home), a lump sum payment, a periodic advance via a line of credit or you may mix and match some variation of all three options. This gives a reverse mortgage buyer some flexibility in how they get paid.
Of course, once you qualify, the amount of the loan available will depend on a number things such the kind of program selected and how much equity will remain after paying off current mortgages. Your age may also be a factor in you and when you get paid on your reverse mortgage.
Let’s say that you are 65 and own your home outright and it is worth 500K. A reputable bank will end up having closing costs of about 20K, but with a lump sum payment of nearly 130K available, at an interest rate of about 9% annually. So, this kind of return will affect how you decide to get paid on your reverse mortgage as a loan calculator might come up with a different outcome if you were to decide to get paid in installments, which you can of course do.
Of course, as a practical matter, you may also choose how you physically get paid, such as by receiving a traditional check or having some sort of direct deposit arrangement.
How You Get Paid: