Michael G. Branson Edited by 
Cliff Auerswald 4 commentsBy Michael G. Branson Edited by Cliff Auerswald 4 comments
All Reverse Mortgage, Inc. (ARLO™) has created a new reverse mortgage amortization calculator that helps you understand how your loan will change over time.
With the amortization calculator below, you can:
Have you considered the advantages of a reverse mortgage compared to a traditional loan? Do you consider reverse mortgages a last resort option? If you believe getting a reverse mortgage means losing all your home equity, it’s time to rethink. A reverse mortgage can offer benefits that go beyond those of traditional loans.
One important feature of reverse mortgages is that there are no prepayment penalties. This means you can make payments anytime without being required to. You can get a reverse mortgage that doesn’t require monthly payments, but you can still choose to make payments to reduce your loan balance over time.
Homeowners can make partial repayments in different ways. Some choose to pay an amount each month that keeps the loan balance the same as when they first borrowed. Others pay more, aiming to fully repay the loan eventually. This flexibility allows you to manage your finances in the best way for you.
Why would I get a Reverse Mortgage if I am going to make payments?
People across the country are increasingly opting for reverse mortgages for various reasons. Compared to traditional loans, reverse mortgages have more lenient qualification criteria regarding income and credit requirements.
Individuals on a fixed income or those unable to traditionally verify their income might find it challenging to qualify for a conventional loan. However, the current guidelines for reverse mortgages do not impose income requirements, and the credit criteria are minimal, making it significantly easier to qualify for this financial product.
And there is another very important reason people like to use a reverse mortgage even when they intend to make payments. There is never a monthly payment required, meaning you can make a payment when or if you want, in the amount you want, or not at all. You choose when the timing is right or convenient for you to make a payment if you desire to do so.
This is huge for people who have income or expenses that fluctuate. Or if it is just not convenient for you to make the payment in any given month due to life events such as family emergencies, birthdays, anniversaries, graduations, births of grandchildren, needed repairs, vacations, or whatever life throws at you, you can skip it any time you decide to and there are no negative consequences. If you skip payments on a forward loan, it can adversely affect your credit or worse.
A reverse mortgage is calculated using the age of the youngest borrower (or spouse) and the expected interest rate. These factors determine the loan-to-value percentage you can get. This percentage is applied to your home value to find out your principal limit and total loan amount.
Yes. A reverse mortgage doesn’t need monthly payments. Interest is added to the loan balance, so the amount you owe increases over time. However, you can choose to make payments anytime to reduce the balance.
Yes. Unlike a traditional loan where the balance goes down with each payment, a reverse mortgage adds interest to the loan balance each month, making it go up. You can stop this by making interest-only payments.
If you don’t pay the interest on a reverse mortgage, it gets added to the loan balance. The next month, interest is charged on the new balance. This is called compound interest.
Interest is deductible when you repay it. If you don’t make payments, you won’t pay interest for that year. If you make voluntary payments, you might get a tax deduction. Note that payments first cover Mortgage Insurance Premiums before interest. Always consult your tax professional.
America's #1 Rated Reverse Lender Celebrating 20 Years of Excellence. LAUNCH REVERSE MORTGAGE CALCULATOR About the Author, Michael G. Branson | Mike@allreverse.comMichael G. Branson CEO, All Reverse Mortgage, Inc. and moderator of ARLO™ has 45 years of experience in the mortgage banking industry. He has devoted the past 19 years to reverse mortgages exclusively.
Look no further. Michael G. Branson, our CEO, brings a wealth of knowledge directly to you. With a robust 45-year tenure in mortgage banking and 19 years dedicated solely to reverse mortgages, he's the expert you want on your side.
Post your question in the comments below and anticipate a personalized response from Mr. Branson himself, typically within one business day. He's here to illuminate all angles of reverse mortgages, ensuring you're equipped with the knowledge to make informed decisions. Take this opportunity to gain insights from a seasoned professional.
4 Comments on this Article| John L. PhD May 13th, 2024 |
My wife will be 80 years old this year. I just turned 76. Our credit rating is 820. We want to repair our inground pool and enclose that area in screening. We would need $75,000 to do this. Our house is worth $475,000, and we have no mortgage. All the so-called calculators for HECM loans produce the amount you can borrow. I don't want to know that; I want to know the costs of the loan going forward. I am very handy with Excel are there any examples of all the items needed to calculate the loan costs over time? I like your website and its approach to providing facts, not salesmanship.
 | Michael Branson May 13th, 2024 |
You can use the HECM amortization calculator on this page and by inserting only an initial draw of $75,000, the calculator will give you the results of the loan with all the exact costs pursuant to the standard HUD formulas-if that works for you. Given your familiarity and expertise with Excel, I would suggest that after you get the HUD standard results, if you are ok with the amounts the loan will make available to you and the costs to get the loan, you request a copy of the All Reverse proprietary amortization calculator. We developed This calculator upon which we will load the initial figures based on your calculator results and then send you the Excel version of the calculator that allows you to do some neat things the HUD calculator does not.
Our calculator will allow you to input future draws and repayments so you can see what will happen if you choose to take additional money out later or make repayments on your loan. After all, there are no payments required on a reverse mortgage for as long as you live in the home and abide by the loan terms (pay the taxes, insurance and maintain the home in a reasonable manner) but some people do choose to make payments to keep the balance from growing. You can also change the interest rates on our calculator, which the HUD calculator will not do. No one can accurately predict future interest rates, and the loan results in the long run will depend on future rates and your own borrowing habits. But with the ability to adjust the factors that really affect the loan going forward, you will have a very good idea of how the loan can be affected based on different changes.
| Bill T. January 11th, 2024 |
If I borrow $200,000 at 6% what is the exact dollar amount I must pay back in 10 years? What extra fees?
| Michael Branson February 6th, 2024 |
There are different ways you can borrow the funds and different programs available that allow you to either take a portion of the funds as you need them, a lump sum draw or monthly payments. The only program. That allows you to take a portion of your Principal Limit (your benefit available to you) in the adjustable-rate program, and then the rate fluctuates as the interest rates change.
The fixed-rate loan requires that you take a full draw of the proceeds available to you, and then there are no further draws available to you, whereas the line of credit or adjustable rate program would allow you to take the amount of money you desire and then if you have more money available you can choose to leave it on the line and never use it or use it later if you want, but you do not accrue interest on funds you do use.
HUD caps the amount you can draw on both programs at 60% of the program's available proceeds at the initial draw or in the first 12 months unless the funds are needed to pay off existing loans or used to purchase a property. With the fixed rate, no additional draws are available after the first draw, though, so you would lose access to 40% of your available loan proceeds if you were not paying off existing loans.
To make a long story short, the best way to determine your costs, which program might give you what you need, and what the amortization schedule would look like is to visit our calculator. You can compare the programs and the costs, view the amortization schedules, and see if it works for your circumstances, as your age and your location will also be factors that will affect those numbers. There is no cost and no obligation, and never any personal information (like social security number or anything like that) is needed to find out if it's right for you.
