Reverse mortgage calculators ask for a few pieces of information and then return results based on the Federal Housing Administration's (FHA's) Home Equity Conversion Mortgage (HECM) or one of the other Housing and Urban Development (HUD)- approved reverse mortgage programs.
Estimating payments based on relatively current or average reverse mortgage interest rates, the calculators will show that if you have equity in your home, you can qualify for a lump sum, monthly payment or line of credit. You will notice that the results will not be for the entire value of your home, as lenders will not typically loan a sum for the entire equity remaining on the home.
There are some reverse mortgage pitfalls that seniors should be aware of before entering into a reverse mortgage. HUD requires that seniors talk to a reverse mortgage counselor before entering into a new loan, and for good reason.
A reverse mortgage is a loan on your home, but it's a special loan. A reverse mortgage is not paid back while you live in the home, only after you sell it or pass away. So lenders have to cover the reverse mortgage interest rates on the home while you live in it. Lenders typically do not loan the entire amount of the home's equity for this reason. Once the home is sold, the lender is due to be paid. But the senior will never make a payment on the loan as long as they live in the home.
Other reverse mortgage pitfalls exist, so it's important to do your research before you enter into one of these loans.
For more resources regarding HUD Reverse Mortgage Program or even about Reverse Mortgage Quotes and especially about Reverse Mortgage Counselors please review these pages.
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