All Reverse Mortgage, Inc. (ARLO™)
Reverse Mortgage Calculator
19 YEARS OF EXCELLENCE.
We are proud to be America’s #1-rated HUD-approved lender celebrating 19 years of excellence. We maintain an A+ Exemplary Rating from the Better Business Bureau (BBB) and are honored to be a Torch Ethics Finalist for 2021 & 2022.
THE LEADER IN LOWER RATES PER HUD DATA
The Department of Housing & Urban Development (HUD) publishes average interest rate data for the public for each Home Equity Conversion Mortgage (HECM) lender. Among the top 20 national reverse mortgage lenders surveyed, All Reverse Mortgage, Inc. is a leader in rates, according to HUD data.
LOWER RATES MEAN MORE $ FOR YOU
Since interest rates are a primary factor in determining how much money you can receive, borrowers with the lowest rates typically receive more proceeds and overall benefits from their reverse mortgage. In addition, lower rates mean better performance of equity retention over the life of the loan. We encourage you to compare!
IF YOU ARE NEW TO REVERSE MORTGAGES, START HERE!
WHAT IS A REVERSE MORTGAGE?
A reverse mortgage is a loan secured by your home. The home must be your primary residence (that means that you, the borrower, must live in the home for as long as you have the loan). This type of loan allows borrowers to access a portion of their tax-free equity without making monthly mortgage payments. No payment is required until the last surviving homeowner moves, dies, or sells the home.
The borrower maintains the home’s title and is responsible for property taxes and homeowner’s insurance payments. The amount borrowers receive is determined by the HUD calculations based on the age of the borrowers (specifically, the age of the youngest borrowing or non-borrowing spouse), the value of the home, or the HUD lending limit, whichever is less, and the interest rates in effect at the time.
Borrowers never have to make a monthly payment on reverse mortgage loans. There is never a prepayment penalty, so they can make any payment they wish, including repaying the loan at any time.
Since 1989, the HECM has been insured by the federal government through the Federal Housing Administration (FHA), a division of HUD. Since its inception, the reverse mortgage program has helped thousands of homeowners like you safely access a portion of the equity in their homes to enjoy their retirement years better.
IS A REVERSE MORTGAGE RIGHT FOR YOU?
Reverse mortgage loans are not suitable for everyone. There’s also a downside to reverse mortgages. It may surprise you to hear a lender say this, but it is true. If you are looking for a short-term loan, you may be better suited for a different type of financing.
A reverse mortgage loan can sometimes require closing costs and upfront mortgage insurance premiums, making it impractical as a short-term solution in some cases.
However, for those who wish to remain in their homes and need extra cash flow, the HECM may be precisely what you are looking for. We explain how a reverse mortgage works and answer many frequently asked questions and common misconceptions.
Educate yourself or your family on the safeguards with our pros and cons guide.
WHAT ARE THE REQUIREMENTS?
- At least one homeowner must be at least 62 years of age.
- You must reside in the home as your primary residence.
- Your home must be either a single-family home, a two- to four-unit owner-occupied home, a townhouse, an approved condominium unit, or certain manufactured homes.
- You must attend an educational HUD-approved counseling session by phone or in person.
- You must pass financial assessment guidelines and continue to pay future property charges such as property taxes and homeowners insurance.
HOW MUCH MONEY CAN YOU GET?
Generally, you can expect to receive 35–60% of your home value depending on your age, program selection, and current interest rates.
The amount available is based on the following:
- The youngest borrower’s age
- Current interest rates
- 2023 HECM lending limit of $1,089,300 or up to $4,000,000 on jumbo loan programs
Start with a personalized quote by ARLO™ – the only reverse mortgage calculator that offers eligibility, real-time rates, and advice to help you select the right program.
TYPES OF PAYMENT OPTIONS FOR REVERSE MORTGAGES
There are various ways in which borrowers can receive their loan proceeds. The choice of method often depends on the reason for acquiring a reverse mortgage or the strategic plan behind it. Here are the available payment options and their associated considerations:
The line of credit is the most popular option among borrowers for receiving their reverse mortgage funds. The following considerations apply:
- Borrowers can access funds only when needed, which may help manage living expenses.
- If left untouched, the line of credit grows over time, maximizing borrowing potential.
- It can benefit those who don’t immediately need the funds but wish to have a financial safety net.
Term payments provide borrowers with fixed payments for a set period, while tenure payments allow for monthly payments throughout the life of the loan, even exceeding the home’s value. Here’s what you need to know:
- Some borrowers utilize term payments to delay claiming Social Security benefits, using these funds to boost their income.
- For instance, a 65-year-old planning to defer Social Security until age 70 can use term payments to supplement income for the next five years.
- Under tenure payment, payments only stop upon the borrower’s death or permanent home exit. Taxes and insurance must still be paid promptly to avoid defaulting on the loan.
- Both options also offer a modified term/line of credit plan or a modified tenure/line of credit plan, combining fixed payments and a line of credit.
A lump-sum disbursement might be the right choice if a large, immediate payment is necessary. These circumstances could include the following:
- Home renovation costs.
- Medical bills.
- Paying off a substantial mortgage to eliminate monthly payments.
Choosing a fixed-rate option for the lump sum allows you to decide how much of your home equity you want to utilize up to your maximum benefit amount. For example, if you need $30,000 for home renovations but qualify for an $80,000 loan, you might opt for the smaller amount.
Remember, the fixed-rate loan is a single-draw loan. If you use less than your total proceeds or decide to repay a part of the loan, you cannot draw from the loan again. The only way to access additional funds at that point would be to refinance the loan with a new one.
REVERSE FOR HOME PURCHASE
The reverse mortgage purchase program allows older Americans to retain more liquidity and an increased cash flow by not having to pay all cash or take on another mortgage payment when purchasing a retirement home.
Qualifications may be easier than traditional forward (or conventional) financing.
- The qualification requirements for the typical reverse purchase mortgage loan are easier for senior borrowers due to underwriting standards. Home Equity Conversion Mortgage for Purchase (H4P) loans do not utilize debt-to-income ratios for income qualification.
- The H4P program offers an alternative to paying for the home in cash while still being able to eliminate monthly mortgage payments.
- This program is much better for borrowers who might not qualify for traditional financing.
WHAT ARE THE CURRENT RATES?
- Adjustable rates from 7.210% (1.750 margin)
- Fixed rates from 7.060% (8.422% APR)
Learn all about reverse mortgage interest rates and how they affect your available loan and future home equity position.
HUD-APPROVED COUNSELING REQUIREMENTS
All borrowers applying for a federally insured HECM loan must undergo reverse mortgage counseling. Counseling sessions may occur over the phone or in person depending on your location.
The counseling agency’s role is multifaceted:
- It will review your unique financial situation.
- It will explore alternatives such as downsizing or applying for city or state grants.
For a thorough budget analysis, counselors will need information about the following:
- Your income
- Monthly living expenses
You will be issued a counseling certificate upon completing your counseling session. You must sign and deliver this certificate to us for your loan application. Certain states have additional “cooling-off” requirements, prohibiting lenders from proceeding for specified periods after completing third-party counseling. Before committing to a loan with time constraints, please check with us to see if your state has this requirement.
As a HUD-approved lender, we must provide a list of at least 10 counseling agencies to choose from. The FHA mandates Five of these agencies, including the National Council on Aging.
We can process your loan only after we receive your completed application and your signed counseling certificate (and after any additional waiting periods required by state laws).
HOW IS A REVERSE MORTGAGE REPAID?
Reverse mortgages require no monthly payments as long as the borrower(s) lives in the home. The loan becomes due and payable when the last borrower on the original loan permanently leaves the property because they died, have permanently moved to an assisted living facility or with family for care, or the borrower sold the home.
The loan becomes due and payable at that time and must be repaid. There are several things borrowers, and heirs of reverse mortgage borrowers should do in anticipation of needing to finalize or pay off the loan.
We recommend that you take the following steps:
- Procure the title in the names of the heirs. This can include adding the names of heirs even before the borrowers pass away. Your reverse mortgage allows you to add persons to the title if at least one original borrower remains on the title. Probate may be required after borrowers pass away, so we recommend that you seek professional counsel from an estate attorney in advance to determine the best method for your circumstances and state laws.
- Contact a local real estate professional to determine the most probable selling price of the home.
- Compare the value or most probable selling price with the loan’s outstanding balance.
- Decide if you want to refinance the loan, pay it off with other funds, or sell the property once you have all your information. If there is equity in the home based on the value and most probable selling price, you would pay off the balance of the loan, but remember, heirs also have the option to pay 95% of the home’s current value if the balance exceeds the value and if you still want to keep the home.
A reverse mortgage is a non-recourse loan. Suppose your heirs do not want to keep the property or sell it. In that case, they can let the lender take the property back, and the lender’s only recourse is the property itself.
The lender cannot look to other assets to repay the obligation. Your heirs will owe nothing, even if the loan balance exceeds the property value.