How a Reverse Mortgage Calculator Works
Friday, October 16, 2020, 6:00 PM | Leave Comment
The working years are often associated with wanting to do things, but not having the time to do so – which is largely why people look forward to retirement!
But what to do if your finances take a knock once you retire? People go looking for financial flexibility in all sorts of places, and some are often not a good idea.
So how do you go about finding a legitimate solution that will not end you up in even deeper debt? Easy.
Skip the traditional loan and go straight for a retirement home loan.
Here’s how your rates will be calculated.
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How much can you borrow?
The actual loan amount is probably one of the first things you need to determine when taking out a loan. Because federal laws are in place that stop you from borrowing the full equity value of your home, you will need to be assessed to figure out how much of the overall value you can borrow. This is where a reverse mortgage calculator comes in. Your lender will use this tool to firstly determine the value of your house, and secondly, to determine what percentage of this value you would be eligible for.
Data like your home’s age and condition, its physical location and the status of your current home loan are all taken into account by the reverse loan calculator, and from there, your loan amount will be calculated.
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What makes a reverse mortgage unique?
The entire structure of a reverse mortgage is unique. For starters, where a regular loan would have had you paying it back in monthly instalments, a reverse home loan will not require you to make any repayments at all until the end of the loan period. This structure will keep you free from monthly payments for as long as there are funds in the loan account, and the loan period remains valid. In fact, not only do you not have to make monthly payments to the lender, you lender will pay YOU, using the funding you have borrowed!
A reverse mortgage is also beneficial in the sense that it makes it almost impossible for the lender to have you evicted from your house, as one of the main conditions of the reverse home loan is for you to remain resident in your house on a permanent basis.
Compare this to a regular home loan, where eviction due to non-payment is a real risk, and it quickly becomes clear how a reverse mortgage can truly be a very beneficial contract to enter!
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How do I qualify for one?
Before you get carried away, remember that a reverse home loan is also known as a retirement home loan. As such, you will have to be at least 62 in order to apply. Even if the reverse mortgage calculator deems you suitable for being granted a loan, don’t forget that there are other conditions that you will have to comply with in order to be granted your reverse mortgage.
