If you're interested in taking out a reverse mortgage you probably want some idea of how much money you could get from your home. A calculator will give you a pretty good idea, but which one is the most accurate? There are many available online but they don't always give you the same figures. Here's an overview of the best of the bunch.
First off, you should never assume the amounts shown on any reverse mortgage calculator are amounts of cash you'd actually receive. At best, they can give you a very good idea of the amounts and these amounts shouldn't vary too much from the actual cash you would receive.
Four factors are used to determine how much you'd get: your age - the older you (and your partner) are the more you can expect; the value of your home - again, the more valuable it is the more you can expect; what mortgage is still owed on your home - obviously this would be deducted off your home's value, giving you less money; where you live - the amount available varies from county to county with homes in rural areas generally receiving less money than those in urban areas.
Before using a calculator you should be aware that there are three main types of reverse mortgage; HECM (FHA or HUD), Home Keeper (Fannie Mae) and Proprietary (Jumbo). Both the HECM and Fannie Mae programs are government initiatives and no matter which broker you use, you would in fact be getting exactly the same product. However, there are a number of jumbo reverse mortgages available and these programs are set up and run by private companies.
Obviously, if you already have an idea that you want a jumbo reverse mortgage, you'd want to use the calculator for that program. However, if you think you require either a HECM or Fannie Mae you want to use a calculator that would report accurate figures for these two programs.
For either HECM or Fannie Mae, these most accurate reverse mortgage calculators can be found on AARP or the National Reverse Mortgage Lenders Association (NRMLA) websites. Having tested both, I found that both gave the same (and accurate) figures for both programs. Also, each option was illustrated. For instance, you could see how much you'd get if you elected to receive a one-off lump sum or how much you'd get if you chose to receive your money as a line of credit and how much that line of credit would appreciate over 5 and 10 years (for HECM). There were other figures illustrated and it was easy to compare both programs.
However, things are not so simple when you're looking at jumbo programs. When searching for a specific program online, you'll find many brokers are listed, many of which offer various jumbo programs. However, when you actually use the broker's calculator you typically find that the figures shown relate to HECM and Fannie Mae and, in most cases, the Financial Freedom program. The other programs are not listed.
The Financial Freedom calculator is popularly used because it is the largest jumbo program on the market. But, I found that the figures illustrated on its calculator differed slightly for the HECM and Fannie programs. This could be for a number of reasons e.g. out of date maximum limits or interest rates. What, this makes one wonder, is whether the amounts illustrated for the Financial Freedom program were also slightly incorrect.
Whichever reverse mortgage calculator you use, be aware that the figures and amounts are only indicative. You should always speak to a local broker to find accurate amounts that you would actually receive against your home.
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