While some seniors plan on using a reverse mortgage as a retirement tool, many others are still on the fence. By now, many consumers know that reverse mortgages are loans that allow seniors over 62 years of age to convert a portion of their home equity into cash. Many consumers also know that borrowers are allowed to keep their proceeds payment free until they sell their home, move or pass away. What most seniors really want to know is how much they would be eligible to receive.
Although many seniors are curious, some are not sure if they are interested enough to begin looking for lenders. Fortunately, seniors who want to know how much they could qualify for but are not ready to contact a lender can use a reverse mortgage calculator to get the answers they need.
What a Reverse Mortgage Calculator Can Tell Seniors
A reverse mortgage calculator is a free online tool that can be used to calculate a senior's eligibility and potential loan proceeds. To use a calculator, seniors must enter the age of the youngest borrower, existing liens and their home's estimated market value. Using this information, the calculator will determine whether the user might be eligible for a loan and how much he or she might qualify to receive from the available equity.
For accuracy, many calculators base their estimates on current interest rates. Some calculators are also capable of calculating mortgage insurance, title fees and other fees based on the users' home value and state. While a calculator may not be totally accurate, some are very close. For a free tool, a calculator can be exceptionally useful. Seniors who are still unsure as to whether a loan might benefit them can learn a lot from using one of these calculators.
What a Reverse Mortgage Calculator Cannot Predict, and How to Get Answers
Although many calculators are fairly accurate, there are things that these tools cannot predict. For instance, if a senior has a current tax lien on his or her home, the individual will not qualify for a loan until the lien has been satisfied. This is not something that a reverse mortgage calculator could predict or calculate into its findings.
Most calculators also fail to consider property type. If an individual owns a property that is not approved by the Federal Housing Administration--for example, a manufactured home built before 1976--a calculator will determine possible proceeds without factoring in the issue. These calculators are by no means perfect tools. They are, however, extremely beneficial for seniors who are still deciding whether a loan might improve their quality of life in the future.
Seniors who want more accurate quotes that factor in all of their personal information will need to contact a lender. Contacting a lender is the only way for seniors to conclusively determine their eligibility, options and potential payout. Still, reverse mortgage calculators are some of the best online tools that seniors can use to plan their retirement and future financial plans.