Which option is NOT a valid disbursement option for a HECM?

Which option is NOT a valid disbursement option for a HECM?

• A. Lump Sum
• B. Monthly payments
• C. HELOC
• D. Fixed weekly withdrawal

Answer: (D)

Understanding how a HECM pays out funds is essential. The program offers several disbursement methods that align with how borrowers use the loan and how interest accrues: a lump sum (one-time), monthly payments (either for a fixed term or for as long as the borrower remains in the home), a line of credit that can be drawn on as needed, or a combination of these options. A fixed weekly withdrawal isn’t part of the allowed payout structure. The approved methods are one-time lump sums, regular monthly advances, a line of credit, or a combination of a line of credit with monthly advances. Weekly draws would not fit into these payout patterns and aren’t supported under the program’s rules. That’s why the fixed weekly withdrawal is not a valid disbursement option.

Understanding how a HECM pays out funds is essential. The program offers several disbursement methods that align with how borrowers use the loan and how interest accrues: a lump sum (one-time), monthly payments (either for a fixed term or for as long as the borrower remains in the home), a line of credit that can be drawn on as needed, or a combination of these options.

A fixed weekly withdrawal isn’t part of the allowed payout structure. The approved methods are one-time lump sums, regular monthly advances, a line of credit, or a combination of a line of credit with monthly advances. Weekly draws would not fit into these payout patterns and aren’t supported under the program’s rules. That’s why the fixed weekly withdrawal is not a valid disbursement option.