One of the questions asked most frequently by seniors getting a reverse mortgage is,
"How Much Money Can I Get From My Reverse Mortgage?"
Many seniors believe that they will get a large check each month or even a large line of credit equal to the amount of their home.
The rule of thumb is 50%. Most seniors will get 50% of their equity in a reverse mortgage. However, new rules of as 2014 allow for seniors to only receive about half of that at closing and the next half after one year.
Here is an example. Mr. and Mrs. Singh from Fresno, California are both over the age of 62. They paid cash for their home several years ago and have lived mortgage free in their northwest Fresno home for the last 15 years. They have family in India that they want to go visit, but do not have the capital to do so.
Their home is worth about $300,000. The government requires that half of the equity from the home remain in the home. So that would leave approximately $150,000 available to them. Once closing costs are paid, they have approximately $141,000 left to them. At the closing of the loan, they will receive approximately $81000. Their remaining line of credit is $60,000 which will be available one year after closing.
This gives Mr. and Mrs. Singh the freedom to enjoy their retirement and live life more abundantly. For as long as either of them are living in the home, there will be no monthly mortgage payments. They will however, be responsible to pay for their homeowner's insurance and property taxes.
So back to the question of how much money can you get from a reverse mortgage, the answer depends on your age and how much you owe on your home. Here is another example:
Mr. and Mrs. Hurst also from Fresno, California, got a late start on retirement. They were unable to go into retirement with no mortgage. They would like to free up their mortgage payment to spend on other things they need in retirement. Their home at Woodward Lakes in Fresno, California appraised for $620,000. They have a mortgage payoff balance of $300,000. The reverse mortgage is going to pay off their existing mortgage, but there will not be any extra money available for a line of credit. However, Mr. and Mrs. Hurst can enjoy living on the lake and not have to worry about making their monthly mortgage payment.
For questions about your own Reverse Mortgage, please call me directly in Fresno at 559-994-3692 or anywhere else in California at 800-779-1851.
Comments(4)