Aarp Reverse Mortgage Calculator

AARP Reverse Mortgage Calculator

Home Value:

Existing Mortgage Balance:

Age of Youngest Borrower:

A reverse mortgage allows homeowners, typically 62 or older, to access the equity in their home as tax-free funds while still living in the property. It’s a powerful tool for retirees looking to supplement income, pay off existing mortgages, or cover living expenses.

The AARP Reverse Mortgage Calculator is designed to help homeowners estimate how much money they can access, the funds available after paying off existing mortgages, and remaining home equity. This easy-to-use online calculator makes planning your retirement finances simple and accurate.

How the AARP Reverse Mortgage Calculator Works

The calculator requires three key inputs:

Home Value: The current market value of your home.
Existing Mortgage Balance: The amount remaining on your current mortgage.
Age of the Youngest Borrower: The youngest borrower’s age determines the maximum loan-to-value (LTV) ratio.

After clicking Calculate, the calculator provides:

Estimated Loan-to-Value (LTV) Used: The percentage of your home value you can borrow.
Estimated Principal Limit (Max Loan): The maximum amount you can receive.
Estimated Funds After Paying Existing Mortgage: Money available after paying off your current mortgage.
Estimated Remaining Home Equity: The equity left in your home after accessing the reverse mortgage.

How to Use the Calculator

Enter the current home value in dollars.
Input any existing mortgage balance you wish to pay off. If there’s none, leave it as zero.
Enter the age of the youngest borrower. Reverse mortgages typically require borrowers to be 62 or older.
Click Calculate to view your estimated loan, net funds, LTV, and remaining equity.
Click Reset to start a new calculation.

Example Calculation

Scenario: Planning Retirement Funding

Home Value: $350,000
Existing Mortgage: $50,000
Age of Youngest Borrower: 68

Results:

Estimated LTV Used: 41%
Maximum Loan: $143,500
Funds After Paying Existing Mortgage: $93,500
Remaining Home Equity: $206,500

This shows that the homeowner can access significant funds while preserving a portion of their equity for future needs.

Benefits of Using the Calculator

Financial Planning: Helps retirees understand available funds and remaining home equity.
Quick Estimates: Instant calculations without complicated formulas.
Loan Insights: See maximum loan limits based on age and home value.
Mortgage Payoff Planning: Know how much you can use to pay off an existing mortgage.
Accessible Tool: Works on desktop, tablet, or mobile devices.

Tips for Accurate Results

Use your current home appraisal value for precise estimates.
Include existing mortgage balances to calculate net available funds.
Enter the correct age of the youngest borrower – this affects LTV.
Remember that maximum LTV varies by age and lender; the calculator provides estimates.
Use the results to plan retirement income, home improvements, or debt repayment.

Frequently Asked Questions (FAQs)

Q: Who qualifies for a reverse mortgage?
A: Homeowners aged 62 or older with significant home equity typically qualify.
Q: What is Loan-to-Value (LTV)?
A: LTV is the percentage of your home value you can borrow. Higher age often allows higher LTV.
Q: Can I pay off my existing mortgage with a reverse mortgage?
A: Yes, reverse mortgages can pay off outstanding balances.
Q: How much money can I get?
A: The calculator estimates maximum loan based on home value, age, and existing mortgage.
Q: Do I lose ownership of my home?
A: No, you retain ownership and the right to live in the home.
Q: Are reverse mortgage funds taxable?
A: Generally, reverse mortgage proceeds are tax-free income.
Q: Can I use a reverse mortgage to supplement retirement income?
A: Yes, many retirees use it to increase monthly cash flow.
Q: Is there a minimum age to qualify?
A: Yes, borrowers must be 62 or older.
Q: Can I leave the mortgage to heirs?
A: Yes, heirs inherit the home and can pay off the reverse mortgage if they wish to keep it.
Q: Does the calculator account for fees?
A: This calculator provides estimates; actual fees may reduce funds.
Q: What happens if my home value decreases?
A: Most reverse mortgages are non-recourse loans, meaning repayment is limited to home value at sale.
Q: Can I take the money as a lump sum?
A: Yes, reverse mortgages offer flexible disbursement options including lump sum, monthly payments, or lines of credit.
Q: Will the mortgage balance increase over time?
A: Yes, interest and fees are added to the loan balance over time.
Q: Can I calculate multiple scenarios?
A: Yes, simply click Reset to try different home values, ages, or existing mortgage balances.
Q: Is this tool affiliated with AARP?
A: This is an informative calculator for planning; consult a licensed lender for official reverse mortgage terms.

Conclusion

The AARP Reverse Mortgage Calculator is an essential tool for retirees planning financial security. It helps homeowners estimate loan limits, available funds, and remaining equity with ease. By entering home value, mortgage balance, and borrower age, you can make informed decisions about accessing home equity while maintaining ownership.