Understanding Reverse Mortgage Loan Amortization With Our Handy Calculator

Getting a reverse mortgage is a big financial decision that requires careful consideration. Unlike traditional mortgages that see the loan balance decrease over time reverse mortgages are unique in that the loan balance increases over time. This is because no monthly payments are required on a reverse mortgage.

With a reverse mortgage, you receive either a lump sum payment line of credit or monthly payouts that are added to the loan balance. As the loan balance grows over time, your remaining home equity decreases. This complex process of increasing loan balance and decreasing home equity is known as reverse mortgage amortization.

To help you understand exactly how your reverse mortgage will amortize, our company has created a useful reverse mortgage loan amortization calculator. Our calculator provides an easy way see how your loan balance, remaining equity, and other factors will change over time.

How Our Calculator Works

Our reverse mortgage loan amortization calculator is easy to use and only requires a few inputs:

• Estimated home value
• Your age (and spouse’s age if applicable)
• Initial lump sum payment or line of credit amount
• Expected annual appreciation rate
• Interest rate

With these inputs, our calculator generates an amortization schedule showing the projected loan balance, accrued interest, and remaining home equity year-by-year. You can adjust the inputs to see how different loan amounts, appreciation rates, and interest rates impact the amortization

The amortization schedule starts on day 1 and projects up to 30 years into the future. This long-term outlook helps you understand how a reverse mortgage works over time.

Our calculator also lets you model different scenarios like taking annual disbursements from a line of credit or making repayments towards the balance. This allows you to see how your actions can affect the amortization schedule.

Key Facts on Reverse Mortgage Amortization

When using our reverse mortgage loan amortization calculator, keep in mind some key facts:

• Interest accrues on the outstanding loan balance and is added to the balance monthly. This increases the balance exponentially over time.
• Remaining home equity equals the current home value minus the loan balance & accrued interest.
• Loan advances taken increase the loan balance. Any repayments made reduce the balance.
• The loan comes due and payable when the borrower dies, sells the home, or no longer lives in the home as a primary residence.
• Appreciation increases home value while depreciation decreases home value over time. Adjust the annual appreciation rate in the calculator to model different scenarios.

Understanding how these factors interact is important when evaluating a reverse mortgage. Our calculator helps illustrate the potential long-term impacts.

When to Use Our Calculator

Our reverse mortgage amortization calculator is a useful planning tool in several scenarios:

Shopping for Your Reverse Mortgage

• Use it when applying to see loan costs over time under loan quotes.
• Adjusting inputs helps you model different loan amounts and structures.
• Compare amortization schedules across different lenders.

Modeling Disbursements From Your Line of Credit

• If taking annual disbursements, input amounts to see the impact.
• Helps plan timing and amounts for withdrawals.

Evaluating Changes After Getting Your Loan

• Review periodically to see impact of interest accrual.
• Update home value and rates if they change post-closing.
• See impact if considering making repayments toward principal.

Financial Planning and Budgeting

• Useful for inheritors to estimate equity remaining.
• Helps estate planning when assessing assets.
• Models how heirs may repay loan balance upon borrower’s passing.

Estimating Taxes on Disbursements

• Amortization schedule provides amounts taken each year.
• Apply IRS rules regarding reverse mortgage disbursements.
• Calculate estimated taxes owed.

As you can see, our calculator has many helpful applications for consumers. We encourage you to leverage it throughout the evaluation and planning process.

Features of Our Calculator

Some key features that make our reverse mortgage loan amortization calculator useful:

• Custom Inputs – We allow manual inputs for home value, ages, and loan details so you can model your actual scenario.

• Amortization Schedule – Schedule shows outstanding balance, equity remaining, and accrued interest each year of the loan term.

• Growth Rates – Adjust expected annual home value appreciation rate and interest rate over time.

• Disbursements & Repayments – Ability to model taking disbursements from a line of credit or making repayments.

• Clear Charts – We provide helpful charts so you can visualize amortization, equity, and other trends.

• Downloadable Schedule – You can download or print the full amortization schedule.

• Mobile Friendly – Our calculator works great on mobile devices so you can use it on-the-go.

• Secure – Our calculator does not store your data or require any sign-up.

With these useful features, our reverse mortgage loan amortization calculator provides an easy way to evaluate this complex financial product. We encourage you to use it as a planning tool when considering a reverse mortgage.

Next Steps to Take

If you want to move forward with a reverse mortgage, we recommend taking these next steps:

• Get Quotes – Talk to lenders and get personalized quotes for your specific financial situation.

• Run Scenarios – Plug these quotes into our calculator and run different amortization scenarios.

• Compare Offers – Review amortization schedules side-by-side and select the optimal loan terms.

• Consult Others – Discuss your plans with financial advisors, accountants, lawyers, and family members.

• Complete Counseling – HUD requires you receive counseling to discuss the implications of and alternatives to a reverse mortgage.

• Close Your Loan – Work with your lender to complete the application and underwriting process.

Our reverse mortgage amortization calculator helps you make an informed decision. We want homeowners to fully understand these complex products before moving forward. Please reach out if you need any help analyzing your personalized amortization scenarios.