Welcome to part two of our three part series on how you can take the proceeds of a reverse mortgage. Last time we discussed the LOC (Line of Credit) option and how that can be used to grow your proceeds over time. That being said, some people will need to access the entire amount of proceeds at the close of the loan. This option is called a lump sum payout.
The lump sum payout basically means that after we pay off all the existing liens against the property we will be left with some amount of money (Net Available to you) and you are choosing not to leave any of that money in a credit line but instead to take all of it at the time the loan closes. You will have a couple ways to take the money with a lump sum:
- Direct Deposit:If you chose the direct deposit option then the closing department of your lender will take down your bank account information during the scheduling process. They will then use that information to set up a wire transfer so that once your loan proceeds are ready to disperse they can go directly into your bank account. This is the easiest and quickest way to get access to your lump sum loan proceeds.
- Mailed Check: If you chose to have a check mailed to you then after your loan is ready to disperse a check in the amount of your available proceeds will be mailed to you from the title company. Depending on the company used and how far you are from their location that check will take anywhere from two to five days to get to you.
Another nice thing about the Lump Sum option is that you have instant access to your funds whenever you need them. With a LOC you have to wait for the funds to be released from the servicer and then for them to post in your account. If you take your funds as a Lump Sum and keep them in your bank account you can access them whenever you want. You can write a check, use a debit card, or access the funds to pay off purchased made on a credit card.
Stay tuned for part three of this series, Monthly Payments.
If you have any other questions, please do not hesitate to contact one of our bankers at One Reverse Mortgage.com, or leave us a comment, we will get back to you as soon as possible.