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Reverse Mortgage Calculator
A reverse mortgage calculator can be a useful tool to quickly determine if you, or someone you know, will qualify for a reverse mortgage. Different from a full reverse mortgage quote, a reverse mortgage calculator is simply an online tool that gives you an instant estimate of the proceeds available under a select few reverse mortgage programs. They work by using the information that you enter into the boxes and plugging them into a reverse mortgage lender’s computer program that automatically returns figures that are based upon that particular lender's guidelines.
Try our Reverse
Mortgage Calculator or learn more about Reverse Mortgage Calculators below.
A reverse mortgage calculator does not qualify you to obtain a loan. There are far too many factors that lenders must consider to decide if they can offer you a reverse mortgage and if so, what amount of money. This process of considering your application is called underwriting. Only after your reverse mortgage application is approved by a lender's underwriting department, can they officially offer you a loan. Until then, all the figures are preliminary.
Preliminary numbers are, however, exactly what a reverse mortgage calculator is designed to give you. There are several pieces of data that you must input in order for the program to produce estimates for you:
Date of Birth: occasionally, a program will ask only for your age, but more exacting reverse mortgage calculators, require your date of birth and the date of birth for any other homeowners (such as a spouse). It is important to note that all homeowners must be at least age 62, or the calculator will tell you that you do not qualify for a reverse mortgage. While there is a reverse mortgage program that has a minimum age of only 60, few online calculators provide any information on it. If one of the homeowners is under the age of 62, try leaving their age out and use only the date of birth for the homeowner over the age of 62. The calculator will return an estimate of reverse mortgage proceeds assuming that the younger person is not on title to the home when the loan closes. If both homeowners are over the age of 62, and the calculator returns a negative number, it means the amount that you owe on your home is too much for the age of the homeowners. With all reverse mortgages, the older you are, the more money is available to you up front. You can try leaving out the younger of the two homeowner's date of birth, but in order to get the amount of money the calculator returns then, that younger person cannot be on title to the home when the loan closes.
Home Value: the reverse mortgage calculator will ask you to enter the value of your home. This is a very important step because the value of the home is by-far the most important factor in determining how much money you may qualify for under a reverse mortgage. Try to make your best educated guess when deciding what value to enter. You may even want to use a conservative number so that you get a "worst-case" scenario. If you have no idea how much your home is worth, there are several things you can do. First, try looking up your home value on www.zillow.com but also pay attention to their confidence factor in the value it gives you. This site does not work for all homes. Also take a look at the asking prices for comparable homes close to yours – those can be the best indicator of what the appraised value is going to be. Custom homes, homes with acreage and homes with valuable attributes like oceanfront property can be very difficult when it comes to estimating values. In these cases, it is best to talk to a real estate agent or better yet, an appraiser. Your reverse mortgage lender can ask an appraiser for a "comp check" which is a quick and dirty (and usually free) way of establishing a reasonable estimate of value.
Existing Mortgage: enter the total of the current balances for all existing mortgages and liens (such as property taxes that are due) on your home into this section of the reverse mortgage calculator. Include the amount of any prepayment penalties that would be owed if your mortgage was paid off. This is important because reverse mortgages require that all existing liens are paid off at the closing of the reverse mortgage. Usually this is accomplished with the money from a reverse mortgage. But, if you owe too much on your home, the reverse mortgage might not provide enough money. In this case, you will have to come up with the shortfall yourself. If you cannot do this, then perhaps the reverse mortgage is not for you.
Zip Code: entering your zip code into the reverse mortgage calculator is necessary because the loan limits change by area. For example, the HUD/FHA Home Equity Conversion Mortgage (HECM) loans on the first $362,790 in property value in Orange County, California. In Kern County, California the lending limit is $280,250. These amounts are NOT the amount available under the reverse mortgage, but are the maximum amount of home value that the HECM program will recognize in calculating how much you qualify for. If your home is worth more than the lending limit for your area, then excess home value is ignored in the calculation for the HECM program. The zip code can make a difference for jumbo reverse mortgage programs (or any program that is not FHA) as well. Some areas have been designated as "declining markets" and some lenders are automatically reducing the loan amounts for these areas, which affects the figures that the calculator produces.
Aside from this information that you input into the reverse mortgage calculator, there are some
other important considerations, especially concerning the results that are returned. As mentioned above, an online reverse mortgage calculator can only give you figures for a small sampling of reverse mortgage programs. There are multiple HUD/FHA (HECM)
programs and a myriad of non-FHA or jumbo reverse mortgage programs. Each of
these programs has their own benefits and tradeoffs, which really should be
explained by a reverse mortgage loan officer. For example, some offer greater
loan amounts, some have lower interest rates and some have lower fees. Some may
not even be available for your particular property type or location. So while
online reverse mortgage calculators are useful for rough estimating purposes,
they have big limitations when it comes to making any actual plans or decisions.
For those purposes, and for understanding all of the caveats and details,
request a reverse mortgage quote from a competent lender.
Your lender should be able to shop among at least 10 different reverse mortgage programs. If they only can offer two or three, look for a different lender. Do not let them tell you that there are only two or three programs – they are likely doing so because that is all they have to offer. There are at least 15 different reverse mortgage programs, each with their pros and cons. One of them may be vastly better for your circumstances than another, so be sure that you have the opportunity to consider a broad range. However, it is not a good idea to pull up a list of lenders and start calling them all asking for different quotes. Your phone will not stop ringing after that and your mailbox will get stuffed with junk mail. Just pick a company and a smart loan officer who can do the shopping for you and be your point of contact - your sanity will
thank you.
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