Comments on: What A Reverse Mortgage Calculator Won’t Tell You http://reversemortgageloanblog.com/2008/01/23/what-a-reverse-mortgage-calculator-wont-tell-you/ News and discussion about Reverse Mortgages Sat, 30 Apr 2011 21:05:04 +0000 hourly 1 http://wordpress.org/?v=3.0.5 By: John Pecha http://reversemortgageloanblog.com/2008/01/23/what-a-reverse-mortgage-calculator-wont-tell-you/comment-page-1/#comment-779 John Pecha Wed, 23 Jan 2008 20:54:46 +0000 http://reversemortgageloanblog.com/2008/01/23/what-a-reverse-mortgage-calculator-wont-tell-you/#comment-779 An interesting article indeed. But I think a couple additions should be made. Yes the loan must be paid back in full after a maturity event occurs. However, if the loan balance is greater than the home sells for, you will NOT owe the "full" balance of the Reverse Mortgage-only what the home can sell for at that time AND after realtor comissions are paid. The borrower nor their estate or heirs will have to pay the difference. It is important to make that distinction, since it is a valid concern and fear of many potential borrowers. There is a calculator that will show you how much equity you could expect over a period of time. It's not truth, but rather an estimate. It's an estimate because it makes assumptions about factors such as interest rates, loan advances taken and home market values- all three of which are terribly difficult to predict with accuracy. Instead, the calculator uses the current interest rate, what proceeds you plan on withdrawing and a property apprectiation rate factor that can be adjusted to reflect the market your home is located in. It's called an amortization schedule and your Reverse Mortgage specialist is required by law to disclose this document to you at application. You can, and should, be able to see this schedule at any point in the consultation process. It is an important document no doubt. It will help provide better understanding of the affects a Reverse Mortgage will have on your property, especially if you want to leave it to your heirs, family, etc. The most important part of the Reverse Mortgage process is weighing all of your options. Consider selling and moving. Consider using your retirement accounts and other liquid assets first. Consult a trusted advisor or financial professional to understand the future impact of every option you have. Then, you'll be making an informed decision that will best fit your situation. An interesting article indeed. But I think a couple additions should be made. Yes the loan must be paid back in full after a maturity event occurs. However, if the loan balance is greater than the home sells for, you will NOT owe the “full” balance of the Reverse Mortgage-only what the home can sell for at that time AND after realtor comissions are paid. The borrower nor their estate or heirs will have to pay the difference. It is important to make that distinction, since it is a valid concern and fear of many potential borrowers.

There is a calculator that will show you how much equity you could expect over a period of time. It’s not truth, but rather an estimate. It’s an estimate because it makes assumptions about factors such as interest rates, loan advances taken and home market values- all three of which are terribly difficult to predict with accuracy. Instead, the calculator uses the current interest rate, what proceeds you plan on withdrawing and a property apprectiation rate factor that can be adjusted to reflect the market your home is located in. It’s called an amortization schedule and your Reverse Mortgage specialist is required by law to disclose this document to you at application. You can, and should, be able to see this schedule at any point in the consultation process. It is an important document no doubt. It will help provide better understanding of the affects a Reverse Mortgage will have on your property, especially if you want to leave it to your heirs, family, etc.

The most important part of the Reverse Mortgage process is weighing all of your options. Consider selling and moving. Consider using your retirement accounts and other liquid assets first. Consult a trusted advisor or financial professional to understand the future impact of every option you have. Then, you’ll be making an informed decision that will best fit your situation.

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