Retiring Wise Blog
Reverse Mortgage Calculator: How Do They Work?04/17/13 / Finances / Reverse Mortgage Information / Written By: Kristen Curzytek
A useful tool you can find at Onereversemortgage.com is the reverse mortgage calculator. It can provide an estimated amount of proceeds when getting a reverse mortgage. But how does it work, and how helpful is the calculation? Here is some useful information about the reverse mortgage calculator.
Filling out the calculator
The fields you need to fill out with the One Reverse Mortgage calculator is the value of your home, current mortgage balance (if you have one) the amount of the mortgage balance (if you have one) your age and your zip code. Each of these fields is important in determining the amount of proceeds you can receive from a reverse mortgage. If you do not know the exact amounts, using your best guess is sufficient as the calculator is going to give a range for you based on the numbers that you input.
Factors that affect the amount of proceeds you receive
When you calculate your proceeds you will see a range based on the information you have provided. This is because the calculator is calculating a range or general sum of what you could receive from a reverse mortgage. Here are some details about each field and why they are important.
Value of your home – The value of your home is the first factor that is looked at to determine how much proceeds you can receive. The higher the value of your home the likely hood you will receive a larger amount of money, unless you have a large mortgage balance.
Mortgage balance - The mortgage balance is important because one of the things you need to have in your home to get a reverse mortgage is equity in your home. Without sufficient equity in your home a reverse mortgage does not make sense. If you have a mortgage on your home the proceeds from your reverse mortgage first go to paying off your first mortgage balance (if you have one).
Age – With the reverse mortgage program the older you are the more proceeds you will qualify for.
Another important item that will determine how much money you receive is the appraisal of your home. The appraisal will determine the value of your home which will in turn affect how much you receive from your reverse mortgage.
Why it’s important to call and talk with a licensed professional
A very important thing to consider is each person’s situation is different from the next. Also the market has changed so much in the last 5 years. Values of homes can be surprising to homeowners. When you talk with a licensed expert they can discuss the details of your home and the market your home is in. Our licensed experts are able to look at homes in your area and determine a better market value of your home. While the appraisal will really determine the value if your home, our licensed experts can provide the insider information that can give you the better idea of your home’s value.
The reverse mortgage calculator is a great tool if you are considering a reverse mortgage. It is very important to remember that although it is a wonderful tool it is not 100% accurate. The calculation is a general estimate of what you could receive based on the information you provided. The best thing you can do if you are interested in a reverse mortgage is call and talk to an expert. They can provide you with more accurate information to help you decide if a reverse mortgage makes sense for your financial goals.
Kristen Curzytek is a writer for Retiring Wise. Give us a call at (800) 401-8114 to talk to one of our licensed professionals. They can discuss your financial situation with you and determine if a reverse mortgage makes sense for you and your financial goals.