NITTY-GRITTY of a REVERSE MORTGAGE has to do with CASH FLOW. You'll gain access to your HOME EQUITY and improve your CASH FLOW. Often you will have multiple choices on how to receive payments - a lump sum, monthly or only as needed. If you have a current mortgage to pay off, not having a monthly principle and interest payment will keep more money in your pocket; also improving your CASH FLOW.
To gain access to cash when it's needed, many borrowers set up a LINE OF CREDIT (LOC) as part of their REVERSE MORTGAGE. The HECM (Home Equity Conversion Mortgage - a federally insured REVERSE MORTGAGE) has a unique feature called a "growth rate". This is the NITTY-GRITTY which allows the unused portion of the LINE OF CREDIT to grow larger over time. Giving you, the borrower, access to cash when unforeseeable events occur in the distant future.
A REVERSE MORTGAGE refinances and replaces any existing mortgage, and pays off any federal liens. If there is sufficient loan proceeds, you might also pay off other debt - like car payments, student loans, credit cards, etc. The NITTY-GRITTY would be that you'll be consolidating your current debt into one loan - your REVERSE MORTGAGE.
Your investment, bank and retirement accounts are better preserved by having another "bucket of cash" to draw from when your circumstances change. This could be a volatile Stock Market where withdrawing funds is not advisable, for even health or family issues. In similar cases the REVERSE MORTGAGE often performs the function of ASSET PRESERVATION. Helping your money last your lifetime.
This is the NITTY-GRITTY that you'll really love! There are no monthly principle and interest payments required, You are required to pay your property taxes, hazard insurance, HOA or other property charges when due. The loan balance is due when the last borrower on title (or eligible non-borrowing spouse) permanently moves out or a repayment event occurs.
The HECM for PURCHASE (H4P) loan product became part of the REVERSE MORTGAGE toolbox in 2008 as part of the Home Economic Recovery Act (HERA). Eligible homeowners can use Cash plus a REVERSE MORTGAGE to buy a home and have no monthly principle and interest payments.*
*Homeowners must continue to pay property taxes, hazard insurance, HOA and other property charges and and maintain the home as their primary residence.