Using a Reverse Mortgage Calculator
Reverse mortgages are a method of raising money based on the amount of equity related to a specific property. In essence they are a useful tool enabling elderly home owners to access funds which are then secured 100% against the home owner’s property.
The money gained from a reverse mortgage is not subject to any taxation, and can be used for virtually any purpose. If however you are in the process of going through a bankruptcy suit, this will be taken into consideration and could lead to a delay in the process of setting up the reverse mortgage account. When you use a reverse mortgage calculator to estimate the amount of the funds you may be able to access, you must bear in mind that there are certain things that have to be paid off as a prerequisite to obtaining the funds in the first place. Essentially this is to ensure that you are debt free.
The reason for being debt free is actually in your own favor. A reverse mortgage is very often the last chance saloon; in other words it is normally the final chance you will have of raising substantial funding. In effect, what it is that you are doing, is that you are selling your property there and then. You still have the right to live in the property up until the time you die, or for example, when you might have to go into care etc; but until that time, you maintain full rights to live there.
The potential legal ownership of your property will, at the time that the funds are made available to you, transfer to the company providing that is providing the reverse mortgage. If you still have any debts left unpaid once you funds are spent, you could find yourself in severe financial difficulties, and this is why the mortgage company will insist that any outstanding mortgages and other personal debts are paid off with the released funds. So you need to take all of these things into consideration when you once you have used your reverse mortgage calculator to estimate your gross funds.
It is also necessary (and a legal obligation) to take financial counseling before a reverse mortgage application can be considered. The HUD (department of Housing and Urban Development) has a list of approved financial consultants that you can set up a meeting with. If you are not familiar with the internet, your financial consultant may also be able to act as, or refer you to an appropriate reverse mortgage calculator.
There are seven main factors that have to be considered in a reverse mortgage calculator. They are:
- The value of the property to be reverse mortgaged.
- The condition of the property to be reverse mortgaged.
- The declaration of any other outstanding liens against the property.
- The interest that will be applied.
- The age of the applicant(s). The more senior the applicants(s), the larger the amount of money that will be offered.
- Whether the payments are to be scheduled, and if so across what period, (can be until you are deceased or in a care home/hospital), or whether the payment will be made in one lump sum.
- A comparison of the appraised value as opposed to HUD’s nationally set ceiling figures.
Check out my other guide on mortgage payoff calculator and mortgage calulator
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