Reverse Mortgage

    Dan Westlake

    Reverse Mortgage

    Started by Dan Westlake Replies (1)

    Do you feel these are a good thing or a bad thing for seniors? One commercial on tv says that 94% of those who get one recommend them.

    This site appears to give a fairly good explanation of what a reverse mortgage is, how it works, the advantages and disadvantages.

    What I couldn't appear to find anywhere was a calculator that would allow my to create some kind of scenario as a test. For example, say I have a home worth $200,000 and I take out 40% as a reverse mortgage which would be $80,000 and say the interest is 3% and don't make any payments. At the end of 10 years what is the amount that would need to be paid when I sell the house?

      • Dan Westlake

        By Dan Westlake

        I did find a reverse mortgage calculator here.

        Here is what I entered, a value of $200,000 receiving $1,000 per month for 15 years. Based on 3% on the loan and the real estate value going up at 2% per year it says the equity of the home would be zero at 30.9 years. Assuming that works out if I'm 55 I would then be 86.

        Out of curiosity, I changed the interest rate on the loan to 6% and left everything else the same. In that scenario the equity fell to zero after 13.9 years. If that scenario is accurate at age 69 there wouldn't be any equity left in my house and my $1,000 monthly income would cease.