Reverse Mortgage Calculator
Get the desired amount as a line of credit or a lump sum. Our reverse mortgage calculator utilizes three key variables - estimated home value, remaining loan amount, and age of the homeowner - to determine how much tax-free cash you can access. By inputting these variables into the calculator, you can get an estimate of the potential funds that may be available to you through a reverse mortgage.
Please update the values in the form
and click calculate.
Disclaimer - The information provided by this calculator is for illustrative purposes only and is not guaranteed to be accurate. The default figures shown are hypothetical and may not be applicable to your unique situation. It is important to consult with a licensed reverse mortgage professional before making any decisions based on the results obtained from this calculator. This calculator does not have the ability to pre-qualify you for any specific loan program. Qualification for loan programs may require additional information, such as credit scores and cash reserves, which are not gathered in this calculator. MakeFloridaYourHome does not guarantee the accuracy or reliability of the information obtained from this calculator. Please consult with a qualified professional for personalized advice and information regarding your specific reverse mortgage for purchase scenario.
Origination Cost
Mortgage financiers charge an origination fee to cater for operation costs to process your loan. Although lenders charge differently, the Federal Housing Association caps the maximum at $6,000.
A home not exceeding $125,000 attracts an origination fee of $2,500. If the home’s value exceeds $125,000, lenders charge 2% of the first $200,000. Similarly, financiers charge 1% of the total value for a home exceeding $2,000 in value.
Appraisal Fee
As a requirement, you should have the property appraised before submitting a mortgage application. An appraisal determines the property’s market value, which is critical in determining how much you will receive.
The process also ensures your property is structurally sound and compliant with local safety codes. If your appraiser identifies structural defects, it is your responsibility to hire a repair contractor. Afterward, an appraiser will conduct a second check at an additional cost of $125.
Appraisal costs vary across states. On average, you’ll pay $450 for a home appraisal without a second check.
Interest Rates
Like other loans, a reverse mortgage attracts an interest charge, a percentage of the loan amount borrowed.
Usually, you’ll have two options to choose from; fixed and variable rates.
A fixed rate gives a smaller loan amount but remains the same throughout the life of the loan.
On the other hand, a variable rate offers a flexible payment plan that fluctuates with time. It also comes with a lower introductory offer.
What Determines Interest Rates?
Borrowers set different rates depending on several factors. For example, if your financier borrows money from the US Department of Treasury, they rely on a financial index set by the state department. In turn, it will affect your borrowing costs.
Other factors include; your credit score, home value, interest type, and your preferred mode of mortgage disbursement.
Regardless of the rate, financiers calculate daily interest, which adds to your monthly balance. It usually reflects on the monthly statement you’ll get.
However, unlike conventional mortgages, you can defer a reverse mortgage payment until you pass away, sell the property, or move out.
Reverse Mortgage Insurance
Before closing the loan application process, the Federal Housing Administration charges mortgage insurance to cover you against financial implications.
Insurance premiums cover the following:
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If your home equity is insufficient to pay the mortgage balance when you pass away, vacate, or sell the property, FHA insurance comes handy.
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If you exceed the projected life expectancy entitled to the loan, you continue accessing your monthly disbursement.
- FHA proceeds with your disbursement if your financier can no longer meet its financial obligations.
FHA, therefore, charges an upfront MIP worth 2% of the home value and an annual MIP worth 0.5% of the outstanding amount.
Closing Costs
Some third-party charges form part of a reverse mortgage because of additional services required to complete the process.
Here is a rundown of the closing costs you’ll incur:
Counseling
Before receiving your loan, you must have a counseling session with an agency approved by the US Department of Housing and Urban Development. On average, it costs $125.
Settlement Closing
Settlement is a third-party service responsible for closing the loan application. Settlement closing involves retrieving public records, obtaining payoffs from lenders, and coordinating funding.
Credit Report
Financiers will review your credit history and score to determine if you qualify for a reverse mortgage. A credit bureau is responsible for retrieving all the vital credit reports required. Credit bureaus charge between $20-$50 for this service.
Recording
All loans require a recording and filing of security instruments such as Deeds of Trust at the County records’ office. On average, recording costs $400.
Document Preparation
Your mortgage financier will hire a third-party agent to prepare all the final closing documents. In addition, agents ensure the documents conform to the federal guidelines before loan approval. Document preparation charges may range between $75-$150.
Flood Certification
A flood certification ascertains whether the property is in a flood zone as marked by the Flood and Environment Management Authority. Flood certification charges may cost between $20-$30.
Other closing costs include;
- Lender Title Insurance
- Endorsements
- Notary
Reverse Mortgages: Are Closing Costs Worth Anything?
Most people focus on the cost and not potential benefit when buying a product. However, value overrides cost because it determines what benefits you derive from the product.
A reverse mortgage may consume 3%-4% of your home value but not in cash. You pay in the form of equity.
Moreover, FHA insurance protects you against outliving your home value. It also guarantees that you can occupy the house throughout your lifetime, as long as you pay property taxes and insurance.
