WASHINGTON, D.C. (May 14, 2002) — The National Reverse Mortgage Lenders Association (NRMLA) has announced the addition of a calculator to its popular Web site that enables consumers to find out approximately how much money they can get from a reverse mortgage.
The new “reverse mortgage calculator” permits consumers to anonymously input pertinent data about themselves – their age, home value, and location – and obtain estimates of the dollar amount of potential benefits they could receive under two nationally available reverse mortgage programs – the federally insured Home Equity Conversion Mortgage (HECM) and the Fannie Mae Home Keeper loan.
Prospective borrowers can see how much money they would receive under each product under different payment options – a lump sum payment, line of credit, or monthly payment (loan advance) for life. Consumers simply enter their birth date (or birth dates, in the case of a couple), approximate home value, and zip code.
The calculator may be accessed through the home page of NRMLA’s Web site, at http://www.reversemortgage.org.
“By enabling older homeowners to find out how much in specific benefits they could receive from a reverse mortgage, we hope seniors will get a clearer picture of the tremendous impact that these loans can have on their financial independence, and help them make informed decisions about their retirement,” said NRMLA President Peter Bell.
Following are examples of how much money that two hypothetical borrowers would receive from the HECM and Home Keeper loans, as computed by the reverse mortgage calculator:
Example 1:
A 72-year-old single female living in Rochester, NY, in a home valued at $250,000 (debt-free). According to the calculator, this borrower with a HECM reverse mortgage would qualify for a $75,134 lump sum paymen, a $75,134 line of credit (which would grow by 4.40 percent a year), or a monthly cash payment for life of $515. With a Home Keeper loan, this same borrower would qualify for a lump sum payment of $81,233, a $81,233 line of credit (with no annual growth in future years), or a monthly cash payment for life of $642.
Example 2:
The borrowers are a couple, a 75-year-male and his 70-year-old wife, living in Rochester, NY, in a home valued at $250,000 (debt-free). According to the calculator, this couple with a HECM reverse mortgage could qualify for a $71,723 lump sum payment, a $71,723 line of credit (which would grow in size by 4.40 percent a year), or a monthly cash payment for life of $482. With a Home Keeper loan, this couple could qualify for a lump sum payment of $48,376, a $48,376 line of credit (with no annual growth in future years), or a monthly cash payment for life of $404.
Factors that affect the amount of a reverse mortgage include the age of the borrower(s) at the time of application, the amount of equity in the home, the location of the home (only for HECMs), and current interest rates.
A reverse mortgage is a loan available to older homeowners (62+) that allows them to address their retirement needs by converting part of the equity in their home into tax-free income, without having to sell their home, give up title, or take on a new monthly mortgage payment. Borrowers can use the funds for any purpose – home improvements, supplemental income, health care, retirement of existing mortgages and debt, drug prescriptions, travel, etc.
Borrowers make no monthly payments on a reverse mortgage during its term. The loan comes due when the borrower permanently moves out of his or her home. The repayment amount can’t exceed the value of the home.
MortgageDaily.com
