What are some of the benefits of a reverse mortgage?
- Strengthen your personal and financial independence.
- Help pay for health care or other needs.
- You can never lose your home in foreclosure as long as you maintain the property tax and insurance payments.
- The loan is only paid off when the house is sold by you or your heirs, or all borrowers move out of the house.
- Keep your Medicare or Social Security benefits.
- Use it as a credit line and draw upon it as needed.
- Get all your cash right away.
- Get the best of both—get cash now and have a balance in reserve to use as a credit line.
- No Income Requirements: The homeowner does not need to be working and is not qualified based on income.
As the homeowner receives monthly cash income, the loan balance increases. In the following twelve-month example, the homeowner begins with a debt-free home. As money is received by the homeowner, the mortgage grows. By the end of month twelve, the homeowner owes the bank $6,000 plus $232.44 interest. All Reverse Mortgage loans have a variable rate.
Assumptions*
| Regular monthly advances | $500 |
| Annual interest rate | 7.0 % |
| Monthly interest rate | .583% (.07 / 12) |
| Month | Beginning Balance | Interest | Ending Balance | Cash Disbursement |
| 0 | 0 | 0.00 | 0.00 | $500.00 |
| 1 | $500.00 | $2.92 | $502.92 | $500.00 |
| 2 | $1,002.92 | $5.85 | $1,008.77 | $500.00 |
| 3 | $1,508.77 | $8.80 | $1,517.57 | $500.00 |
| 4 | $2,017.57 | $11.77 | $2,029.34 | $500.00 |
| 5 | $2,529.34 | $14.75 | $2,544.09 | $500.00 |
| 6 | $3,044.09 | $17.76 | $3,061.85 | $500.00 |
| 7 | $3,561.85 | $20.78 | $3,582.63 | $500.00 |
| 8 | $4,082.63 | $23.82 | $4,106.44 | $500.00 |
| 9 | $4,606.44 | $26.87 | $4,633.31 | $500.00 |
| 10 | $5,133.31 | $29.94 | $5,163.26 | $500.00 |
| 11 | $5,663.26 | $33.04 | $5,696.29 | $500.00 |
| 12 | $6,196.29 | $36.15 | $6,232.44 | $500.00 |
*A myriad of criteria is considered when determining the reverse mortgage loan amount, interest rate, etc.
