In addition, your (hypothetical) credit line will accrue interest if you allow it to sit idle and don’t draw from it. Notice how these values differ depending on whether you opted for an HECM Standard or HECM Saver. The downside of choosing a fixed rate HECM is that you must take all of the cash upfront, and cannot elect to receive a monthly payment or line of credit.ĭepending on your inputs and certain actuarial assumptions that HUD makes about you as a borrower, “The table below shows the maximum creditline (with no monthly Income), and the maximum monthly income (with no creditline) that may be available after paying off any mortgages and liens against your home,” as well as the maximum lump-sum payment. Next, you must decide between a variable rate (which fluctuates over time) or a fixed rate. You can see how this is reflected in the calculations. (For more on this distinction, you can read an earlier post on the subject). The main difference between these two loan types is that an HECM Standard offers a higher loan amount, and consequently, an upfront insurance premium. First you must decide between an HECM Standard and HECM Saver. You can see from the Output page (reproduced above) that you actually four separate options when obtaining a reverse mortgage (and several sub-options, which I will explain below). Now, that you have filled out all of the input fields, click the Calculate button to view the results. On the flipside, “Your desired line-of-credit” will be subtracted from your available cash if you elect to receive a lump-sum payout. “Other upfront cash you desire” will be subtracted from any line of credit. The field entitled “Monthly payments on your mortgages” doesn’t actually bear on the reverse mortgage it is merely included to show you the net change in your monthly cash flow if you elect to receive your reverse mortgage proceeds in the form of a (tenured) monthly payment. Failure to do so could result in your being denied a reverse mortgage initially or a cancellation of the reverse mortgage (and foreclosure of your property) down the road. The same is true for necessary home repairs one of the conditions of having a reverse mortgage is that the home must be continuously maintained. ![]() If you have existing mortgage debt/liens, these will need to be paid off upon obtaining the reverse mortgage and subtracted from the principal that you would otherwise be eligible for. The final set of inputs are optional, and may not apply to your situation. (Before obtaining an actual loan, your home will be formally appraised). Next, you need to estimate how much your home is worth try to be precise, since this is the biggest variable in calculating your loan amount. (You can read an earlier post I wrote to understand your options if there are two primary borrowers). With more than one borrower, the lender will use the younger borrower’s age as a basis for calculating the reverse mortgage, which will yield a smaller loan amount. On the reverse mortgage calculator input page, start by entering your zip code (because of regional differences in taxes/fees), and the Date of Birth for you and your spouse. We also offer a balance remaining reverse mortgage calculator. I found that the NRMLA calculator was the most comprehensive and the most transparent, which is why I’m recommending it here. (If you’re interested in a single-purpose or proprietary reverse mortgage, you will probably have to speak to the state agency or lender, respectively, in order to obtain an accurate estimate, since terms may vary). The best one that I’ve come across is from the NRMLA if you’re planning on obtaining a Home Equity Conversion Mortgage (HECM) as 95% of borrowers do, this is the only calculator you need to reference. ![]() There are several reverse mortgage calculators available for free on the web, which will give you an estimate of how much you can borrow. ![]() One of the first questions that someone contemplating a reverse mortgage inevitably asks is, “How much can I get?” Fortunately, you no longer need to speak to a lender in order to obtain an accurate answer.
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