Reverse Mortgage Calculator

Our reverse mortgage calculator will help you determine if a reverse mortgage right for you.

You enter your lump sum amount or how much you would like to receive monthly. You can then see how much you would owe when the loan matures.

This tool lets you try out different dollar values for your advances, so you can figure out what is best for your situation.

Ideally, you want to ensure that the balance of your reverse mortgage isn't more than the value of your home.

A reverse mortgage is a loan specifically for seniors that are age 62 and older. These loans let homeowners cash out their home equity with no monthly payments. The homeowners just have to continue to pay property taxes and insurance for the home.

Uses

Reverse mortgages are commonly used for bills, renovations, daily living expenses, and medical costs. Some homeowners use a reverse mortgage to pay off their existing mortgage to eliminate monthly payments.

The home equity is the collateral for the reverse mortgage. The loan balance does grow over time because there are no monthly payments like a typical mortgage.

Reverse mortgages do not require monthly payments as long as the homeowners reside in the home and maintain it to the Federal Housing Administration (FHA) standards.

Borrowing Limits

The amount of equity you can take out depends on the youngest borrower's age, the value of the home, and current interest rates.

Interest Charges

If you get a loan with a fixed rate, the interest rate is set and will not change. You can also choose an adjustable rate loan which means the rate may increase or decrease over the time of the loan.

You will only accrue interest on your borrowed amount, not the additional interest.

Reporting Requirements

You will need to certify annually that you still occupy this home as your primary residence. The home is not considered your primary residence if you are absent for the majority of the year for a non-medical purpose.

Repayment

The loan does not need to be repaid until about 6 months after the last remaining homeowner passes or moves out of the home.

The amount you owe on the loan cannot exceed the value of your home.

Reverse mortgages are payable when the youngest borrower dies or moves out of the home. When the home sells, the loan will be repaid in one lump sum.

Since you don't make payments, the amount due will be higher than the amount borrowed because of interest. That's why its important to use a reverse mortgage calculator ahead of time.

Exceptions To The Rule

Remember this home has to be your primary residence for a reverse mortgage. You will need to repay the loan sooner if you move, fail to pay taxes, lapse insurance coverage, or need repairs.

Medical Absense

If you were absent for more than 12 consecutive months for a medical reason, the home is no longer considered your primary residence.

No Monthly Payments

The biggest advantage of a reverse mortgage is that you can eliminate your monthly mortgage payments and have access to your equity without selling your home. It's the only way to borrow money while avoiding monthly payments.

Flexibility

Reverse mortgages are flexible and can be used in a variety of ways. Households with financial needs can help remove financial stress.

This could also be used as a financial planning tool - make sure you talk to your financial advisor first.

Low Risk Of Default

There is a low risk of default since there are no payments due until you leave your home. You must keep up on taxes and insurance. Be sure you read the guidelines because you must maintain the house to certain standards.

The lenders have no claim to your other assets or income. You don't owe more than your home's value when the loan matures. This is a big advantage if your home value declines.

No Additional Taxes

There are no taxes on the lump sum of money or fixed income from a reverse mortgage. You also have no restrictions on how you use this money. You are also still the homeowner.

No Deadlines

You can live in your home as long as you want. There are no set deadlines to repay the loan until you either move or pass away.

There are some disadvantages to this loan so be sure you do your research and talk to your financial planner.

High Fees

First, there are high fees. The upfront fees are expensive and include closing costs, origination fees, and insurance.

You can finance this in the loan if you don't want to pay out of pocket, but this is considered the borrowed amount and you will pay interest.

Interest Charges

Every month the amount of owed interest grows. The amount you need to repay could be higher than your original mortgage because of this.

Equity Limitations

Another drawback is that you won't be able to access all of your home equity. The loan amount is determined by your home's appraisal value, your age, current interest rates, and the balance on your mortgage.

Since you are borrowing against your equity in the home and accumulating interest, there may not be much wealth to your heirs.

Reverse mortgages can seem rather complicated. They are the opposite of a traditional mortgage. And many financial advisors have had to study these loans to understand them entirely.

Any cash-strapped senior can benefit from the extra money for living expenses and bills. However, the upfront fees are high.

If you are borrowing a small amount, a reverse mortgage may not be the best option because of the fees.

Be sure you discuss with a financial planner to determine the best option for you. You can also look into a home-equity line of credit for another money option.

Always make sure that there isn't a cheaper option available.