Definitions of Calculator Fields

Estimated Home Value

What you believe to be the appraised value of your home. This is used to help determine the amount of proceeds you will receive.

Current Mortgage Balance

Since a reverse mortgage first pays off your existing mortgage (if you have one), the calculator will subtract the approximate amount you owe from your total amount of estimated proceeds. This will give you a better idea of how much money you’ll have to use however you want. Don’t forget you are still responsible for paying property taxes, homeowners insurance, and home maintenance costs.

How much money do you get from a reverse mortgage? How much can you borrow on a reverse mortgage?

The amount of money a person can get from a reverse mortgage depends on the age of the youngest borrower, home value, and current interest rates. Every person’s situation will be different. For example, the older you are, the more money you may qualify for. The more equity you have in your home, the more money you may qualify for. The lower your current mortgage balance, the more money you will have leftover to spend however you like.

The most money a person can borrow on a reverse mortgage is also dependent on age and current interest rates. However, no matter the age or interest rate, a person cannot borrow more than \$636,150 with a federally-insured reverse mortgage.

How is interest calculated on a reverse mortgage?

If you have a fixed rate loan, your interest rate is locked in at the time you close on your loan. It will not change throughout the life of your loan. If you have an adjustable rate loan, the interest rate may increase or decrease throughout the life of the loan. You only accumulate interest on what you borrow. Remember, if you roll your closing costs and other fees into your loan, that money is considered borrowed.

Yearly basis based on what is borrowed on the loan. Includes any finance fees and costs that were incurred when the loan closed.

What affects my payout?

If you have an existing mortgage, your reverse mortgage will first pay that off. The amount owed is taken out of your proceeds. Remember you are still responsible for paying your property taxes, homeowners insurance, and home maintenance costs. If your financial assessment determines that you may need to put money into a Life Expectancy Set Aside to uphold these responsibilities, that money will also be taken out of your proceeds and will affect the final amount you are able to use at your discretion.

Assuming your closing costs are rolled into your loan, these will also affect your payout. These closing costs include an origination fee, upfront mortgage insurance premium (MIP), servicing fee, and other costs.

Additionally, if you choose a reverse mortgage line of credit and allow the available funds to grow over time, you may have more funds to draw on in the future.