Reverse Mortgage Calculator

Retirees who have made the investment in home ownership have a valuable asset to draw upon. The equity that you have built in your home serves as the basis for taking out a reverse mortgage. A Reverse Mortgage is a home loan that may be taken out against that equity for senior citizens who are at least 62 years of age. The proceeds of the loan may be used for almost any purpose, however there are a few exceptions. A reverse mortgage works in the opposite way of a traditional loan. Instead of the borrower making payments to the lender, the lender is making payments to the borrower, and deducting that amount from the borrowers equity plus interest over time. A reverse mortgage is a specific type of FHA loan which is also known as a Home Equity Conversion Mortgage (HECM).

No payments are due on the loan as long as the borrower lives in the home. When the borrower is no longer occupying the home, the loan must be paid back. Events that trigger the loan to become due and payable include death of all borrowers, failure to pay property tax and insurance, or moving to another location. If the property has a homeowners association, those payments must be paid as well. The borrower has a choice to either sell the home or use funds to pay the balance. One of the great features of a reverse mortgage is that it is a NON RECOURSE LOAN. That means that if you owe more on the loan than the current value of the property, you or your heirs can walk away without owing any money and it won’t affect anyone’s credit. In this case you work with the lender to sell the home, and the lender takes the loss.

• Age Requirement: There is a minimum age requirement of 62 years or older.

• Clear Property Title: If there are existing liens on the property, they must be paid off. This may be done with funds obtained from the reverse mortgage, or by other liquid assets from the borrower.

• Insurance & Taxes: It is the responsibility of the borrower(s) to keep all real estate taxes paid and current. In addition, all homeowners insurance and other associated fees and assessments must be kept current.

• Occupancy: The property is the collateral that the reverse mortgage is based upon. Therefore, only primary residences qualify for a reverse mortgage. Vacation homes or other investment properties do not qualify. The borrower(s) must occupy the home.

• Property Condition: The Borrower(s) must keep the property in average condition.

• Upon the death of the borrower: The reverse mortgage becomes due and payable. If a husband and wife have a joint reverse mortgage, the conveyance of the mortgaged property does not proceed until the death of the last surviving borrower on the reverse mortgage loan. When the last borrower dies, the heirs have the option of satisfying the debt with personal funds or selling the home to pay the balance. Should the balance be more than 95% of the appraised value, the heirs will not be responsible for the shortage.

• You must be 62 years of age and older.

• You must live in the home as your primary residence.

• Owner(s) will always maintain ownership of the home.

• There are no monthly mortgage payments required.

• The owner is responsible for paying the property tax, homeowners insurance, and HOA if applicable.

• The borrower is protected if the housing market declines.

• There are several options of disbursement to choose from depending on whether you choose a fixed rate or adjustable loan.

• Your Social Security & Medicare benefits will not be affected.