The Math Behind a Reverse Mortgage - Video
If you’re considering a reverse mortgage, but not sure it’s right for you, let’s do some math to help make your decision easier.
How much you can borrow is based on the age of the youngest borrower, the value of your home and the expected interest rate. You’re borrowing approximately 40%, while 100% of the value of your home is appreciating at 4% a year on average. That means there will be money left over after the loan is paid.
Let’s look at an example of how a typical reverse mortgage plays out. Jane is a 70-year-old single woman with a home value of $500,000 that’s free and clear. She wants to borrow $1,000 a month - or $12,000 a year - for 20 years. She’ll use the money to pay for long term care, property taxes, and Homeowners Insurance premiums. After year ten, she is projected to have $557,000 in equity and after year 20 $531,584. This means that Jane will have received $1,000 a month in additional income to cover her other retirement expenses... and still have over $500,000 in equity to leave to her heirs!
To find out what your numbers would look like, reach out today.
Laura Phillips
(866) 945-1655
laura@lauraphillips.com
Colorado Reverse Mortgage
