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How To Perform A Reverse Mortgage Calculation
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While there are no monthly payments required, the loan amount will still have to be repaid later on – either when you sell your home or after you pass away. Also, a Reverse Mortgage has many rules and restrictions, which will be discussed below. In order to know how much money you can get from this type of loan, you need to use a “Reverse Mortgage Calculator”, also discussed below.
While there are no monthly payments required, the loan amount will still have to be repaid later on – either when you sell your home or after you pass away. Also, a Reverse Mortgage has many rules and restrictions, which will be discussed below. In order to know how much money you can get from this type of loan, you need to use a “Reverse Mortgage Calculator”, also discussed below.
Reverse Mortgage Eligibility Requirements
Borrower Requirements:
– Be at least 62 years old
– Must legally be the home owner
– Financially able to continue making timely payments on housing expenses (property taxes, mortgage insurance, maintenance etc.)
– Not delinquent on any federal debt
Property Requirements:
– It is your legal primary residence
– A one to four unit house, with one unit owner occupied, or
– A HUD approved condo unit
Needed Data To Use a Reverse Mortgage Calculator
There are many factors that will determine how much money you can receive from a Reverse Mortgage, which is why it is necessary to use a special calculator for this purpose. The information you need to use the calculator is as follows:
– Your home’s market value ( the maximum allowed is $822,375)
– How long you expect to continue living in your home (can be a set number of years or rest of your life)
– Loan Interest Rate
– Loan Closing Costs
– Mortgage Insurance Rate
– How old is the youngest borrower
By inputting all of the above information, the Calculator will tell you how much you can get from a Reverse Mortgage.
Results From Using a Reverse Mortgage Calculator
There are several types of payments you can receive from a Reverse Mortgage:
– Lump Sum at Fixed Rate: The full loan amount, paid all at once upon closing. This is the only type of payment with a fixed interest rate and you can’t get any more money later on.
– Lump Sum With a Variable Rate: Again a lump sum payout at closing, but you will be able to get additional funds after one year.
– Line of Credit: Your loan amount is used to establish a line of credit – which you draw from at your discretion. You only pay interest on what you actually use.
– Lifetime Monthly Payments: Based on the life expectancy of the youngest borrower.
– Set Term of Monthly Payments: Based on how long you expect to continue living in your home.
Example From Using a Reverse Mortgage Calculator
The following was calculated using the calculator found at https://www.moneygeek.com/mortgage/reverse/calculator/
The input data was home value of $800,000; youngest borrower 65; rest of life home occupancy and average closing and insurance costs. Results:
– Lump Sum with Fixed Rate: $236,480 at closing; no additional funds; $236,480 Total
– Lump Sum with Variable Rate: $242,880 at closing; $161,920 Additional after one year; $404,800 Total
– Line Of Credit: $242,880 at closing; $161,920 Additional after one year; $404,800 Total
– Monthly Payment For Life: $2,405/Month starting with closing
