Reverse Mortgage Timing

Bob is now 62 years old and would like to use a reverse mortgage. Bob owes no money on the home and is not in any hurry to retire. Let’s see how the numbers work out with the reverse mortgage at age 62 and age 70.
At this timtre Bob’s home will appraise for $300,000. After figuring the costs involved with the reverse mortgage, Bob would have available to him approximately $142,000 line of credit. Of this $142,000 line of credit, about $80k would be available the first year and about $62k after the first year.
Let’s say Bob waits until he is 70 years old. Of course, we don’t know what interest rates will be in seven years, so we will use the same interest rate used today for illustration purposes.
On most amortization tables used in the reverse mortgage calculator, the home appreciation is based on 4%. That means that we will use the appreciated home value of $394,000 in the new calculations. Based on Bob’s age now of 70 and a home value of $394,000, Bob would now have a line of credit of about $205,000. In this scenario Bob would have $116,500 available the first year and $88,500 after the first year.
These figures are illustrating how the age and home appreciation can affect the funds available with a reverse mortgage.

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