Wealth management is crucial in the later stages of our lives, and it’s best that we are all aware of the options to help maintain or potentially grow our wealth. Reverse mortgage loans are great options to tap into your home’s equity, and they are only available to seniors.
The most prevalent reverse mortgage program is the HUD Equity Conversion Mortgage (HECM), which requires borrowers to be a minimum of 62 years of age. There are also jumbo and private loan products available for borrowers 60 years of age and over reverse mortgage products, too.
Before setting foot in the door of your financial institution, you can figure out how much money you’ll have access to by using a reverse loan calculator (sometimes referred to as a reverse loan calculator). A reverse mortgage calculator will not be able to provide an exact dollar amount, instead, we should look at these services are providing a rough estimate.
Reverse mortgages can be complicated financial products, but they present a potentially life-changing option for senior-citizen attempting to improve their monthly cash flow. Often, these loans are completed with the use of a reverse mortgage calculator. This article will give a brief overview of reverse mortgages and how reverse mortgage calculators work.
How does a reverse mortgage calculator work?
A reverse mortgage calculator works by taking information about you and your home, such as your ZIP code, age, information related to any borrower (spouse, co-owner, etc. that is living in the home and listed on the loan), interest rates, home value, and outstanding mortgage balance to create a rough loan estimate. That estimate represents the dollar figure you would receive after paying any remaining loans, if you were to close a reverse mortgage.
Not all calculators are created equal. Some use national estimates for closing costs that do not consider local differences for title and recording fees, which can be substantial in states like Florida. The calculator needs to utilize all information, as, for instance, an eligible non-borrowing spouse’s age is considered in the calculation of the available proceeds.
As a reminder, calculators are not equal. Some may rely on national estimates for closing costs that do not factor in local differences for title and recording fees, which vary radically in certain states. The calculator needs to consider all relevant information to create the most accurate monetary estimate. However, some do not provide that kind of detail.
What causes HECM Reverse Mortgage Pitfalls
We’ve touched on some of the reasons why calculators cannot provide a completely accurate picture, but we’ll explain further. After receiving all of the data the calculator has requested, it will provide your expected loan process based on the information given. Some take it a step further and explain how payments can be structured. This is important as it will outline how this income will be paid out, how much liquidity you have on standby, or what kind of monthly income you can expect.
A reverse mortgage calculator is a valuable tool in understanding what a reverse mortgage can offer. However, it is not an entirely accurate picture — which can change depending on your specific set of circumstances. It is not a wholly trustworthy depiction of how much money you could obtain, how the payments will be structured, and the impact of future rate changes.
What kinds of reverse mortgage calculators are out there?
A basic search will reveal countless reverse mortgage calculators from an endless list of service providers, all requiring different levels of information to provide a rough picture of your potential windfall. If you’ve worked with a trusted lender in the past, they may provide one for you to use on their website. Non-specific-lender calculators are available at ReverseMortgage.org, administered by the National Reverse Mortgage Lenders Association (NRMLA). If you have a mobile divise, consider searching iTunes or Google Play.
When finding a reverse mortgage calculator to use, be sure the calculator meets your needs, and remember, the numbers are for comparison only. Individual circumstances of your loan may affect the amounts that a calculator will display for you. When you choose to move ahead with a reverse mortgage, your loan originator will help guide you through those individual circumstances as the loan progresses through to closing.
When using a reverse mortgage calculator, be sure that the calculator meets your needs and your situation. The specifics of your loan and situation will affect the amount that the calculator provides, so try to make sure that the calculator asks for data that will paint a more accurate picture. Should you finally choose to move forward with a reverse mortgage, the loan originator will guide you through the specifics to help close the loan.
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