There are several reasons why you want to be very careful using those online reverse mortgage calculators – you know, the web pages with screens that ask you to plug in your date of birth, your home value, your address, and your mortgage balance.
First, most of them are inaccurate. Interest rates used in HECM reverse mortgage calculations change each week. Many of these sites do not update on a consistent basis and your calculation could be thousands of $$$ off without the correct rate. Do not ever make even a casual decision based on results from these calculators. Find an experienced reverse mortgage loan officer and candidly outline your specific situation… an online calculator can’t suggest options or strategies.
Second, some of the sites fail to show you all currently available programs. Worse, some show HECM programs long since discontinued. U.S. Treasury rate based programs have been canceled for some time but still appear regularly on outdated sites. Remember, also, not all lenders offer all programs. For example, only several lenders offer Fixed Rate HECMs. Some lenders offer them only in selected states.
Third, a major component of your fees & costs are derived from local expenses that simply cannot be calculated by these quick look programs. Massachusetts, for instance, charges $350 to record 2 deeds while Maine only charges $70 for the same item. Florida adds very substantial taxes that could negatively impact borrower benefits or results. Title insurance will vary from state to state, also. The cost of an appraisal in a rural area might be greater than in an urban area. Attorney fees can vary dramatically from state to state, too.
HECM Calculator provides practical information on reverse mortgages including the Home Equity Conversion Mortgage (HECM) insured by FHA.