![]() ![]() The property also needs $10,000 of repairs, which she can't afford. Example Where the Reverse Mortgage Decision is Complex Homeowner's StoryĮleanor, a 75-year-old widow, is under financial pressure, because she still has an $80,000 mortgage on her $300,000 home. Now let's look at an example where the reverse mortgage choice is not so clear. ** If unused, HECM credit lines grow at the loan's variable interest rate. * Any property value greater than $625,500 is calculated at the HECM maximum value. This loan provides peace of mind for the couple, allowing them to enjoy their retirement and worry less about overspending. The line can grow over time, ready to provide cash if they deplete their retirement savings. They choose a HECM line of credit, which requires no annual mortgage insurance as long as it goes unused. They own their home free and clear, and it's currently worth $700,000. However, they'd like to travel more and spend more without worrying about outliving their funds. Tom, 70, and Barbara, 68, enjoy a comfortable lifestyle and have substantial retirement savings. When Does a Reverse Mortgage Make Sense? Example Where a Line of Credit Reverse Mortgage is the Right Choice Homeowner's Story The shorter the term, the higher the monthly payments. This option based your payment on a specific term. ![]() Monthly Payments for Your Expected Years in the Home However, if you exceed your life expectancy, you continue to receive monthly payments. Decennial Life Tables published by the US Center for Disease Control. This payment is determined by the life expectancy of the youngest borrower as determined by U.S. Unused lines of credit grow over time, so the actual maximum loan amount can be higher than indicated here. The HECM credit line offers maximum flexibility and lower costs - you pay interest and annual mortgage insurance only on the amount you use. The variable rate lump sum payout allows you to take a lump sum at closing, and you can withdraw additional funds after 12 months. You must take a one-time payment at closing, with no additional disbursements. If you want a fixed interest rate, this is your only available option. Spouses less than age 62 cannot be HECM borrowers, but if they live in the home, their ages affect the maximum loan amount. If you don't know your closing costs, skip this and accept the calculator's default amount.Ĭurrently, the premium is 1.25 percent on the loan balance for HECM programs private programs may have different premiums.įor HECM loans, the youngest borrower must be age 62 or older. HECM costs include upfront mortgage insurance, origination charges and third party fees. If you don't have specific rate information, skip this input and accept the calculator's default rate. Lower rates means you can borrow more, and higher rates reduce your loan amount. If you plan to stay for life, monthly payments will be based on your age and life expectancy. A shorter terms gets you a higher payment. ![]() Your expected occupancy affects your maximum monthly payment. You can estimate your home's value with an online valuation tool, or ask a real estate agent. ![]()
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