A reverse mortgage calculator can be a useful tool to quickly determine if you, or someone you know, will qualify for the program. They work by using the information that you enter in a lender’s computer program to automatically return estimates of the amount of money that you could qualify for based upon that particular lender’s guidelines.
There are several pieces of data that you must input in order for the program to produce estimates for you:
Date of Birth: The minimum age is 62. To some degree, the older you are, the more money is available to you up front. If the calculator returns a negative Age calculator number, it means the amount that you owe on your home is too much for the age of the homeowners. Try leaving out the younger of the two homeowner’s date of birth.
Home Value: The value of the home is by-far the most important factor in determining how much money you may qualify for. Try to make your best educated guess when deciding what value to enter. Your loan officer 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 it is required that all existing liens are paid off at the closing of the loan. Any deficiency may be made up using the homeowner’s cash reserves.
Zip Code: entering your zip code into the reverse mortgage calculator is necessary because the loan limits change by area. If your home is worth more than the lending limit of the particular program for your area, then excess home value is ignored in the calculation.
There are few more things to think about, especially concerning the figures that are produced by these online calculators. As mentioned above, they can only produce the numbers for a few programs. There are multiple government programs and a number of non-FHA or jumbo programs. Each of these has their own pluses and minuses, which should be explained by a competent loan officer. For example, some of them may provide a larger loan amount, while other may have a reduced interest rate or lower fees. Some programs may not even be available for your particular property type or location. So while these calculators will help you in some respects, they are of limited value for actual planning and decision-making purposes. To learn all of the caveats and details, request a reverse mortgage quote from a competent lender.