A reverse mortgage calculator is an online tool used to determine the payout one can expect to receive from this financial product. In addition to payouts, many calculators will also compute a borrower’s expected closing costs, interest rate, and mortgage insurance premiums. These tools are typically used to help borrowers determine whether they would be eligible for a loan, as well as how much they would qualify for should they choose to apply.
How to Use a Reverse Mortgage Calculator
To use a reverse mortgage calculator, borrowers will input their age, the estimated value of their home, zip code, and the remaining balance of their mortgage loan if applicable. The calculator Age calculator will use this information to determine whether the borrower would qualify for a loan based on his or her age and amount of equity.
Borrowers who would qualify for a reverse mortgage will be shown a few different options. In many cases, consumers will be shown how much they would qualify for through a fixed-rate HECM Standard, an adjustable-rate HECM Standard, and an HECM Saver. Consumers will also be shown how much they can expect to receive if they choose to accept their money in a lump sum, line of credit, or receive monthly payments.
Many calculators also calculate payouts based on a combination of payment options. For example, a person may want to receive a portion of their cash as a lump sum and the remaining portion as monthly payments. This is a popular option with borrowers who will be repaying their mortgage loan with a portion of their payout.
Consumers might also be able to calculate their expected interest rate, mortgage insurance premiums, closing costs, and loan origination fee. This is done to help consumers compare their estimated payout with the amount of money they can expect to pay for a loan. While fees can be rolled into this type of loan, they are still important to consider. Any fees rolled into a loan must be repaid, plus interest, once the home is sold.
What to Remember When Using a Reverse Mortgage Calculator
While using a reverse mortgage calculator, consumers must understand that the calculations they receive are estimates. The calculator will not be able to tell a consumer whether he or she would definitely qualify for a loan. These calculators are simply offered to give consumers an idea of what they might be able to qualify for.
Mortgage calculators are great tools for potential borrowers to use prior to applying for a loan. At first, these mortgages may seem overwhelming. There are not only several different loan and payment types, but borrowers are required to pay certain fees, closing costs, and mortgage insurance premiums. Reverse mortgage calculators lay out a consumer’s different options, making them much easier to understand.
The goal of using a calculator is to understand how a reverse mortgage might benefit an individual. After using a reverse mortgage calculator, a borrower should come away with a better understanding of these loans, as well as their possible eligibility.