December 19, 2018 by HECM Pro
MyHECM has probably one of the best reverse mortgage calculators available online.
If you’d like more information about how to use the reverse mortgage loan calculator, keep reading. We’ll walk you through using the the calculator step by step and provide explanations that may be helpful.
If you’d like skip the lessons and just go straight to the calculator, click the following link:
How to Use the Reverse Mortgage Loan Calculator
A HECM reverse mortgage is a federally-insured mortgage program that enables homeowners 62 and over to access a portion of their home’s equity without giving up ownership of the home or taking on a mortgage payment.
No mortgage payments are required as long as at least one borrower is living in the home and paying the required property charges.
You remain the owner of the home and are free to will it to your heirs, who will inherit any equity remaining in the home.
How much you qualify for depends on the age of the youngest borrower, your home’s value, current interest rates, what program you select (variable-rate HECM or fixed-rate HECM), and how the program is structured.
The following walks you through the steps of the reverse mortgage calculator.
Step 1: Age and Home Value
The age and estimated value of your home are key factors that help determine how much you qualify for. Enter the age of the youngest borrower and the estimated market value of your home (not the tax value) and click “Next”.
Step 2: Mortgage Balances and Payments
If you have one or more mortgages on the home, enter the total balances owed and the combined principal and interest payments. Also enter the number of years left on the loan, which will help make the amortization projections more meaningful for you. Click “Next” to continue.
Step 3: Select the State
Select the state in which you live and click “Next” to continue.
Step 4: Select How to Receive Proceeds
The reverse mortgage loan calculator is programmed with several different options for receiving proceeds:
- Lump Sum/LOC – You’ll receive the maximum proceeds available at closing as a lump sum (variable-rate HECM and fixed-rate HECM), then the remainder at one year in the form of a line of credit (variable-rate HECM only).
- LOC Only – You’ll receive all proceeds in the form of a line of credit (variable-rate HECM only).
- Lifetime payment – You’ll receive all proceeds in the form of a lifetime, or tenure, payment to you (variable-rate HECM only).
- 20-Year Payment – You’ll receive all proceeds in the form of a 20-year term payment to you (variable-rate HECM only).
- 15-Year Payment – You’ll receive all proceeds in the form of a
15-year term payment to you (variable-rate HECM only).
- 10-Year Payment – You’ll receive all proceeds in the form of a
10-year term payment to you (variable-rate HECM only).
Click “Next” to continue.
Step 5: Confirm and Calculate
Confirm all the information is correct, then click “next” to continue.
Step 6: Calculation Results
The reverse mortgage loan calculator displays the estimated interest rates, closing costs, and proceeds available.
Note that the interest rates and closing costs are estimates; actual lender interest rates and closing costs will likely vary.
Note also that the fixed-rate HECM only offers proceeds in the form of a lump sum. The variable-rate HECM offers lump sum, line of credit, and term/tenure options.
Click “Next” to continue.
Step 7: Projected Amortization
The amortization schedule displays an analysis of how the loan balance and line of credit change over time. It also displays cumulative savings and/or added income realized through eliminated mortgage payments and added term or tenure payments.
If you found this calculator helpful, please share!