Reverse Mortgage Benefit Calculator

By September 29, 2014Blog, Reverse Mortgage Resources
reverse mortgage benefit calculator

A reverse mortgage benefit calculator is a great tool to find out how much money you can expect to receive from a HECM loan.

To calculate the exact amount of money or percentage of equity, utilize a reverse mortgage benefit calculator.

The amount varies by borrower and depends on:

If there is more than one borrower, the age of the youngest borrower is used to determine the amount you can borrow.

The reverse mortgage benefit calculator calculates the percentage(%) of equity available to Senior homeowners as it relates to their age at the time of closing. For example, If the youngest borrower is 62 years old, they are eligible for a Reverse Mortgage of 52.4% of the appraised value of their home or $625,000, whichever is lower. Keep in mind, To be eligible for a FHA HECM, the FHA requires that you be a homeowner 62 years of age or older, own your home outright, or have a low mortgage balance that can be paid off at closing with proceeds from the reverse loan, have the financial resources to pay ongoing property charges including taxes and insurance, and you must live in the home.

The money from a reverse mortgage can be distributed in several different ways:

  • as a lump sum, in cash, at settlement
  • as an annuity, with a cash payment at regular intervals
  • as a line of credit, similar to a home equity line of credit or HELOC
  • as a combination of these.

Once the reverse mortgage is established, there are no restrictions on how the funds are used. The money from the reverse mortgage can be used for any purpose: home repairs,  in-home health care costs, to deal with an emergency, or simply to cover day-to-day expenses.

The results of the reverse mortgage benefit calculator will give you the exact dollar amount that you are eligible for with every lender. No single lender has the ability to manipulate the Reverse Mortgage calculator results. The only difference between Lenders is the cost of the loan and the amount of credit lenders are willing to give to the borrowers to try and earn their business. For example, some lenders will give credits for Upfront Mortgage Insurance Premiums(MIP), closing costs, title insurance and origination fees, while Brokers don’t quite have the same flexibility.

One of the bigger benefits of a reverse mortgage is that it provides income that people can tap into for their retirement. The advantage of a reverse mortgage is that the borrower’s credit is not relevant, and is often unchecked, because the borrower does not need to make any payments. Because the home serves as collateral, it must be sold in order to repay the mortgage when the borrower dies (in some cases, the heirs have the option of repaying the mortgage without selling the home). These types of mortgages have large origination costs relative to other types of mortgages. These costs become part of the initial loan balance and accrue interest. Senior citizen borrowers with good credit should carefully analyze the options of a more traditional mortgage, such as a home equity loan, against a reverse mortgage.