Reverse Mortgage Calculator Results Explained
Available proceeds are determined by the age of the youngest homeowner, the home's value and the expected interest rate. Since age is a factor, the older you are the more proceeds are available to you.
Reverse Loan Programs: The most popular loan program is the Home Equity Conversion Mortgage (HECM). With the HECM you have the option of a fixed rate with a lump sum draw or and adjustable rate with either a line of credit, a monthly payment, lump sum, or a combination of all.
Fixed Rate Options:
Lump Sum: The lump sum draw is currently the only option available with the fixed rate HECM. It does give you the comfort of knowing exactly how your loan will grow over time since the rate is fixed. This loan is great for borrowers who desire a large lump sum up front. We're finding that most seniors who choose this option have larger mortgage balances that they want eliminated. It is also the most popular choice for those looking to purchase a new home, due to the fact that based on current rates, the fixed rate HECM provides the most benefit to the borrower, lowering the down payment requirement.
Adjustable HECM Options:
Line of Credit: The line of credit allows for all or a portion of your available proceeds to be placed in a line of credit in which you can draw on as you desire. The funds in the LOC will grow at the current interest rate plus 1.25%. This is not to be confused with "earning interest."
Monthly Term Payout / Tenure Payments: With the monthly term and tenure payout options, you are guaranteed a specific amount of money each month. With term option, you select a number of months that you would like to receive a payout and you will be guaranteed that amount of money during that time. With the tenure payment, you will be paid the specific amount as long as you occupy your home as your primary residence.
Combination: With this option, you can choose a combination of any of the options above for the adjustable HECM.
Q&A's
Q. What fees are involved in a reverse mortgage?
A. Fees are determined based on the value and location of your home. The calculation used above is an estimate; however, we have developed our calculator to generate a result that will be as accurate as possible, without having all the details. The fees consist of three main sections; Origination fee, Upfront Mortgage Insurance Premium (MIP) and other fees (title, escrow, appraisal, etc.). For an exact quote, please complete the form above.
The origination fee will vary based on the rate chosen. For example, a loan with a higher interest rate will have a lower origination fee and vice versa. The upfront MIP is 2% of the home's value. The other fees are fees that you would typically come across in any forward mortgage, such as title, escrow and appraisal. There is often times a fee for counseling, however many counselors are known to waive that fee.
Q. What is the service fee?
A. The service fee is a fee paid to the lender to service the loan. Currently, we do not charge a monthly service on the fixed rate HECM or adjustable HECM. The result is a higher net benefit available to you at closing.
Q. How do I lock my rate?
A. As a reverse mortgage broker, we work with several wholesale lenders such as MetLife Reverse Home Loans, Urban Financial Group (Knight Capital), Security One Lending, Live Well Financial and Sun West Mortgage, and as such locking policies will vary from lender to lender, but in general, reverse mortgages cannot be locked until the loan has been approved through underwriting. After approval, lock periods range from 3 days to 30 days.
Q. If all reverse mortgages are the same, how come I am seeing different products from other lenders?
* Reverse Mortgage Calculator results are for illustration purposes only are not an offer to lend. For a real quote, please complete the form above or contact us toll free at 1-888-888-4834. We will provide you a reverse mortgage comparison, TALC, Amortization Schedule and an Estimate of Closing Costs.
Reverse Mortgage Calculator
