The homeowner has three business days after signing the papers to cancel the loan. (These three days are known as the “Right of Rescission” period.)
Upon expiration of this period, the loan funds are disbursed. The homeowner accesses the funds in the form of the payment option selected. Any existing debt on the home is paid off. A new lien is placed on the home. The homeowner may use the loan proceeds for any purpose.
The only exception to a homeowner’s right of rescission is on a HECM for Purchase reverse mortgage. There is no rescission option on a purchase money mortgage.
If you are getting fixed monthly payments, your loan Servicer will disburse the funds on the first business day of each month.
As a borrower, you have the right to change your payment plan at any time. You simply request a new Payment Plan Agreement form from your Servicer. A change may include a small administrative fee of no more than $20. Once the agreement is executed, the new payment plan will go into effect the first business day of the next month.