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I was told that the reverse mortgage loan amount only depends on age and property value?

That does not make sense to me since I might owe a lot on my existing mortgage. How come that is not used in the calcualtion? by Randolph from Lake Forest, California. Oct 30th 2012 Reply


There are many things to know regarding a reverse mortgage, with several options to choose from in order to minimize or eliminate fees, and to minimize the interest that accrues, since you do not have to make payments. You are welcome to contact me at 530-205-9145 to explore further if you'd like.

Oct 30th 2012
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William J Acres (William_Acres)
#1 ranked lender in Arizona - 8,558 contributions

Because there are many types of scenarios where a reverse mortgage might benefit a senior, most that you read about apply to homeowners with a "free n clear" property.. The maximum loan amount will still apply in your scenario.. if the maximum loan amount is not sufficient to pay off your existing mortgage, then you would either have to pay the difference, or you would not qualify for the mortgage.. But keep in mind that if you did have to come to the table with some $$, there's still a huge benefit to you.. "No More Mortgage Payments".. you would still own the home, you would still live in the home, you just wouldn't have to make any payments... if your home's value is sufficient to pay off the existing mortgage, but that's it, then you would need no cash to close, but again, no mortgage payments.. if you have a lot of equity, you could pay off the existing mortgage and receive a monthly check.... so as you can see, there are many scenarios where a reverse mortgage might be beneficial.. The best advice I can give you is to contact a LOCAL mortgage broker who specializes in reverse mortgages, and apply with them. Not the local "Big" bank, and certainly not one of those 50 states internet lenders...By applying with your LOCAL Broker, you have an advantage because he's familiar with local customs and works with numerous lenders, seeking out the best loan terms for your particular scenario. Because he has lower overhead, he can offer you lower rates and lower fees than most of the larger lenders.. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714 WilliamAcres.com

Oct 30th 2012
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Bert Carpenter (BertCarpenter)
#38 ranked lender in Arizona - 1,819 contributions

You were not given all of the facts. Age (of the youngest borrower), value, Interest rate and initial disbursement are used to determine the maximum amount available for a particular Reverse mortgage. If you have a large balance to pay off, there may not be enough in the formula to make it work for you. ~ Bert Carpenter, The LoansA2z team of NOVA Home Loans ~ NMLS 40586 ~ Licensed in California and Arizona ~ www.LoansA2z.com 888-889-9950

Oct 30th 2012
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Linda Wintersteen (Linda123)
#63 ranked lender in Arizona - 1,256 contributions

I WORK in the california market.. it is age of the borrowers, state of the mortgage, and also if you have equity in the home., and also, are you planning to leave the house in a will ? trust? that is something that is real important i am working with two reverse mortgages with the kids, and the parents died, and they want the house .. linda..

Oct 30th 2012
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Samantha Taylor (samantha)
#367 ranked lender in California - 29 contributions

Hi Randolph,A reverse mortgage is a type of home loan especially designed for the senior citizens (those who are 62 years or more of age). In order to get such a loan, you should be the owner of the property and it should be your primary residence. Unless you meet these criteria, you won't be able to get a loan. The maximum loan amount for this kind of a loan is $625,500. It should also be noted here that the older you are, the more money you can borrow. The formula for this is as follows - if you have $250,000 in home equity and if are 62 years old, you may get $110,000. For the same equity amount, you can qualify for $149,000 if you are age 76. You can use a reverse mortgage calculator in order to understand this better.

Oct 31st 2012
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Joe Metzler (JoeMetzler)
#19 ranked lender in Minnesota - 3,852 contributions

You MUST have equity in your home for a reverse mortgage. It works best if the home is owned free and clear. The maximum amount of that equity you can borrow is based on your age.

Oct 31st 2012
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Phil Dumouchel (PhilDu)
#32 ranked lender in South Carolina - 2,237 contributions

Before you get too far into the process, find a housing counselor (usually required prior to getting a reverse mortgage) who is not selling a mortgage and get all the facts. Good information above but a lot of it really depends on your situation and what you are trying to accomplish.

Oct 31st 2012
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Justine Tanega (JTanega)
#672 ranked lender in California - 2 contributions

Reverse mortgage qualification with FHA, is calculated with the value of the property and your age. Typically you need about 50% equity to qualify for the loan. How old are you and how much do you owe, and I can tell you if you qualify.

Oct 31st 2012
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Mark Schmidt (markallenschmidt)
#47 ranked lender in Colorado - 21 contributions

Randolph, let me take a shot at your question. First we determine the value of your property, then we use your age to see how much you qualify for. Then, once we know the maximum amount you can get we subtract your current mortgage and loan costs from that (maximum) amount. Your house is worth $200,000, you are 62. Let's say you qualify for a maximum claim or loan amount of $125,000. Next, you owe $75,000 on your current mortgage. Add the loan fees and insurance, say $8,000 to that amount. $75,000 + $8,000 = $82,000 Subtract $82,000 from $125,000 and you have $43,000. After your mortgage and the fees are subtracted you still have $43,000 available to use as you wish. Value: $200,000Age 62Maximum claim or loan amount: $125,000Loan fees and insurance costs: $8,000Existing mortgage: $75,000Amount deducted from your maximum claim or loan amount, $82,000 (current mortgage, loan fees and FHA insurance)Money, cash you access: $43,000 after your mortgage, loan fees and FHA insurance are paid. Hope that helps, it is hard to wrap your mind around a Reverse Mortgage but once you get it, it really does make sense.Mark Allen Schmidt mschmidt@ccmclending.com

Oct 31st 2012
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