Click here or on the link below to open the Reverse Mortgage Loan Calculator in a new window. Return to this screen at any time for information about the calculator and to learn about the results you receive.
To complete a Reverse Mortgage calculation, you will answer six questions about your home’s value and mortgage (if any).
Until recently there were three main types of Reverse Mortgages available to consumers: The HUD HECM, The Fannie Mae HomeKeeper and proprietary Reverse Mortgage programs – also called Jumbo Reverse Mortgages (these were loan programs offered by private institutions for owners of high value homes.)
The credit crunch and recent changes to housing laws have – at least temporarily – eliminated the availability of the Fannie Mae HomeKeeper as well as most Jumbo Reverse Mortgage loans.
GOOD NEWS: The good news is that the lending limits on the HECM have increased. As of Nov. 6, 2008 the Department of Housing and Urban Development (HUD) has increased the loan limit on the Home Equity Conversion Mortgage (HECM) to $417,000 in almost all areas of the country.
The various ways you can receive the Reverse Mortgage funds are listed in the left hand column. These options (Cash Available, Monthly Income, Line of Credit, etc.) are described in detail below, but when interpreting your results, it may help you to first understand how the reverse mortgage calculations are done:
Please note that the HECM is the only Reverse Mortgage loan program currently widely available. The HECM is a product regulated and insured by the federal government and is offered by approved lenders like Financial Freedom, Wells Fargo and many others. There will likely be little difference in the maximum origination and closing cost fees charged by each lender.
You have options for how you wish to receive the available money from your home – cash, monthly income, a line of credit, or any combination of these payouts.
This calculator shows the loan amount available after all costs are paid (origination fees, insurance fees, closing costs, servicing fees set-aside).
Cash Cash is cash – nothing tricky about it. A reverse mortgage enables eligible home owners to take out cash, in a lump sum, from their home equity. This cash can be used for ANY purpose. Although you make no payments, interest charges accrue to the total loan amount every month you carry the reverse mortgage. Therefore, total size of your loan will increase over time, though the total amount owed can never exceed the value of your home. Cash Available Without Liens: If you have no mortgage or other liens against the home, this is the lump sum available for each of the programs. This is the total amount of money available to you in a lump sum after all origination fees. However, if you have any loans against your home, these must be paid before you are eligible for this sum. Otherwise, you should refer to the Cash Available After Paying Off Liens. Cash Available After Paying Off Liens: If you are still carrying a mortgage and included that information in the calculation, this column is a better indication of the cash available to you. All liens (a lien is any financial claim against your property) must be paid off in full before you receive any cash for other purposes. This row shows the amount of money available to you after paying off liens against the property. If a borrower has a mortgage balance or other liens in excess of the cash available without liens, the borrower has a so-called 'shortfall'. The borrower will not qualify for a Reverse Mortgage unless additional funds are available and when combined with the loan amount are enough to pay off of the current mortgage and liens. (Note: if you do have a shortfall and do not other funds to pay off the balance, you may wish to consider the merits of refinancing your mortgage.) Monthly Income Opting to receive monthly income from a Reverse Mortgage is similar to purchasing an annuity. The monthly income amounts in this calculator show you the amount of money you could receive each month for the rest of your life, no matter how long you live. The amounts listed here assume a "Tenure" or lifetime option for the monthly income. However, a lender can also offer "term" options. A term option means that you will receive monthly income for a predetermined amount of time. With the term option you would likely receive a higher sum of money each month than you would receive with a lifetime or tenure option. To determine what income you could receive with a term option, contact a lender. Monthly Income Without Liens: The amounts shown here represent the monthly paycheck you could receive for the rest of your life – assuming that you do not have any outstanding loans against your property. Monthly Income After Paying Off Liens: This is the number to look at if you are interested in lifetime monthly income, but are still carrying a mortgage. You must pay off all liens before you yourself take any income from a reverse mortgage. Monthly Savings By Paying Off Liens: If you input a mortgage payment amount, this row will appear in the calculator. This row shows you your monthly savings achieved by eliminating the mortgage payment expense. Net Additional Monthly Income: The monthly savings of having no mortgage payment added to the monthly income after paying liens results in your net additional income. That is your reduced expense, plus the monthly income from a loan. Credit Line Option A credit line is money that you have available for use on anything at anytime. A credit line differs from cash in that you only accrue interest charges on the money that you use, not on the amount available to you. For example, if you had $50,000 available to you with the cash option on a reverse mortgage, you will have $50,000 available to you as a line of credit. The difference is that if you only wanted to spend $10,000 during the first year of your reverse mortgage, you would only accrue interest on the $10,000, not on the $50,000 available to you. The total loan would grow more slowly than a lump sum option. In addition, the credit balance available will increase monthly for the life of the loan. A credit line is the most popular and in most cases the most cost efficient option for receiving a reverse mortgage loan because you choose how much money to take and when you want it. Interest is only paid on the costs of the loan and the amount you’ve taken out while the balance available continues to grow. Credit Line Available After Paying Off Liens: This is the amount of money available to you in a credit line after all liens against your property have been paid off. Annualized Growth Rate: This is the annual amount your available credit line balance grows. Credit Line Value in 5 Years: This row shows you the amount of cash that would be available to you in a line of credit after a five year period. Your reverse mortgage credit line balance would grow to the amount shown in your calculation. Credit Line Value in 10 Years: This row shows you the amount of cash that would be available to you in a line of credit after a ten year period. Your reverse mortgage credit line balance would grow to the amount shown in your calculation.
Cash is cash – nothing tricky about it. A reverse mortgage enables eligible home owners to take out cash, in a lump sum, from their home equity. This cash can be used for ANY purpose. Although you make no payments, interest charges accrue to the total loan amount every month you carry the reverse mortgage. Therefore, total size of your loan will increase over time, though the total amount owed can never exceed the value of your home.
Opting to receive monthly income from a Reverse Mortgage is similar to purchasing an annuity. The monthly income amounts in this calculator show you the amount of money you could receive each month for the rest of your life, no matter how long you live.
The amounts listed here assume a "Tenure" or lifetime option for the monthly income. However, a lender can also offer "term" options. A term option means that you will receive monthly income for a predetermined amount of time. With the term option you would likely receive a higher sum of money each month than you would receive with a lifetime or tenure option. To determine what income you could receive with a term option, contact a lender.
A credit line is money that you have available for use on anything at anytime. A credit line differs from cash in that you only accrue interest charges on the money that you use, not on the amount available to you.
For example, if you had $50,000 available to you with the cash option on a reverse mortgage, you will have $50,000 available to you as a line of credit. The difference is that if you only wanted to spend $10,000 during the first year of your reverse mortgage, you would only accrue interest on the $10,000, not on the $50,000 available to you. The total loan would grow more slowly than a lump sum option. In addition, the credit balance available will increase monthly for the life of the loan.
A credit line is the most popular and in most cases the most cost efficient option for receiving a reverse mortgage loan because you choose how much money to take and when you want it. Interest is only paid on the costs of the loan and the amount you’ve taken out while the balance available continues to grow.
You can choose to combine the types of payouts on your Reverse Mortgage to meet your unique needs and efficiently use your funds. For example, you could receive half cash, a quarter monthly income and a quarter of the money in a line of credit.
A Reverse Mortgage lender could help you design a program to meet your unique needs.
The results you receive from the reverse mortgage calculator are only an estimate. The actual amount of the loan varies with your exact age, interest rates and the county lending limits in your area. For an official estimate, contact a Reverse Mortgage lender by completing our information request form.
Still have questions about the Reverse Mortgage calculator? Call us at 877-631-4007.
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