Disbursement begins three days after the documents have been signed, during which the borrower can cancel the loan for any reason. Once this period is over, you can then receive loan funds in the payment plan you chose.
Examine the last few details in receiving your reverse mortgage proceeds and be aware of issues that may happen during the life of the loan.
Right of Rescission
Disbursement of funds only commences three business days after the borrower signs the closing documents. The borrower has the Right of Rescission, or the right to cancel the loan, during these three days.
Afterwards, you will now have access to the funds in your reverse mortgage depending on the payment plan you chose. A loan servicer will be assigned to manage your account and be responsible in disbursing your funds.
The loan servicer will also send you periodic account statements and monitor whether taxes and home insurance are kept current and if the borrower continues to live in the home.
The payment plan you selected during application and closing determines how and when you receive your funds.
- Lump sum: You can receive this amount immediately after the Right of Rescission period.
- Line of credit: You can have access to this line of credit immediately after the Right of Rescission period.
- Fixed monthly payments: You will receive this amount on the first business day of each month.
You may also change your payment plan at any time for a small administration fee, usually $20 or less. A new Payment Plan Agreement is then finalized, and the changes will take effect on the first business day of the next month.
Next step: Settling a Reverse Mortgage Account