Line of Credit

Whether the proceeds from your Reverse Mortgage are in cash or a line of credit, all of it must be paid back w hen the house is sold.

A line of credit from a Reverse Mortgage works the same as a line of credit on a regular mortgage.

A credit line is money that you have available for use on anything at anytime. A credit line differs from cash in that you only accrue interest charges on the money that you use, not on the amount available to you.

For example, if you had $50,000 available to you with the cash option on a reverse mortgage, you will have $50,000 available to you as a line of credit. The difference is that if you only wanted to spend $10,000 during the first year of your reverse mortgage, you would only accrue interest on the $10,000, not on the $50,000 available to you. The total loan would grow more slowly than a lump sum option. In addition, the credit balance available will increase monthly for the life of the loan.

A credit line is the most popular and in most cases the most cost efficient option for receiving a reverse mortgage loan because you choose how much money to take and when you want it. Interest is only paid on the costs of the loan and the amount you’ve taken out while the balance available continues to grow.