All Reverse Mortgage, Inc.
Reverse Mortgage Calculator
Welcome to All Reverse Mortgage, Inc. (ARLO™)
At All Reverse Mortgage, we take pride in being America’s leading HUD-approved reverse mortgage lender, consistently achieving a 4.98/5 star rating for our outstanding service. Our commitment to integrity and exceptional customer service earned us an A+ Exemplary Rating from the Better Business Bureau (BBB) and the distinction of Torch Ethics Finalist in 2021 and 2022.
Focused Expertise in Reverse Mortgages
With nearly two decades of dedicated service, All Reverse Mortgage is a trusted name exclusively in reverse mortgage lending. Our unwavering ethical standards have been recognized with nominations for the Torch Award by the BBB for two consecutive years. Our consistent top ratings and positive reviews are a testament to our commitment to prioritizing the needs and well-being of our customers. As a HUD-approved direct lender, we are known for our honesty, reliability, and exceptional service.
Transparent and Cost-Effective
At All Reverse Mortgage, our approach is straightforward and customer-centric. We operate without intermediaries, ensuring more savings and benefits for our clients. We consciously forgo expensive celebrity endorsements, instead focusing on keeping our services affordable, accessible, and transparent. This approach reflects our dedication to providing honest and cost-effective reverse mortgage solutions.
About Reverse Mortgages
What is a Reverse Mortgage?
A reverse mortgage is a loan secured by your home, allowing you to access part of your home’s equity tax-free without needing monthly mortgage repayments. The reverse mortgage loan is only available to homeowners who are at least 62 years old and who meet specific underwriting eligibility.
As the borrower, you retain the title to your home and, as such, are responsible for ongoing expenses such as property taxes and home insurance. The loan amount you can access is determined based on HUD guidelines. Considering factors such as the age of the youngest borrower or spouse, your home’s value, and current interest rates.
There are various types of reverse mortgages, such as Home Equity Conversion Mortgages (HECM), federally insured, and proprietary reverse mortgages. Each type has its own set of rules and loan limits. Before obtaining a reverse mortgage, counseling from a HUD-approved agency is required. This ensures that you fully comprehend the loan’s terms, implications, and long-term considerations, such as the necessity to maintain the home and the impact on your home’s equity over time.
Notably, reverse mortgages never have a prepayment penalty. This grants you the flexibility to make any payment you wish or not, including repaying the loan in full at any time. Lastly, it’s wise to consider alternatives to reverse mortgages, like home equity loans or lines of credit, to ensure this financial decision aligns with your long-term goals and needs.
History of the HECM Program
Since its introduction in 1989, the Home Equity Conversion Mortgage (HECM) program has been federally insured by the Federal Housing Administration (FHA), a branch of the Department of Housing and Urban Development (HUD). This program has been instrumental in aiding thousands of homeowners in securely tapping into their home equity, thereby enhancing their financial freedom and overall quality of life during retirement.
Evaluating if it’s Right For You
Deciding whether a reverse mortgage suits your financial needs is a significant decision. While these loans can offer substantial benefits for some, they’re not the best solution for everyone. Understanding the potential advantages and drawbacks is essential, even though hearing caution from a lender might seem unusual.
Considerations for Short-Term Financial Needs: If your financial requirements are short-term, other types of financing might be more appropriate. Reverse mortgages, including the Home Equity Conversion Mortgage (HECM), often come with specific fees like closing costs and mortgage insurance premiums. These added expenses can make reverse mortgages less ideal for those not planning to stay in their homes for long.
Long-Term Benefits of HECM: On the flip side, a HECM can be an excellent option for individuals intending to remain in their homes and seeking additional income to support their lifestyle or cover expenses. We provide thorough information to help you understand how reverse mortgages work. Our resources cover frequently asked questions and dispel common myths, offering a clearer picture of what to expect.
Educating Yourself and Your Family: We strongly advocate for you and your family to educate yourselves fully about these loans. Our detailed guide discusses the pros and cons, explaining the safeguards in place. This way, you can make an informed decision that aligns with your long-term financial goals and living situation.
Reverse Mortgage Eligibility
To determine if a reverse mortgage is the right financial solution for you, it’s essential to understand the specific requirements you must meet. These criteria are in place to ensure that a reverse mortgage is both suitable and beneficial for applicants.
Understanding the Basic Requirements:
- Age Requirement: At least one homeowner must be 62 years or older. This is a primary eligibility factor for a reverse mortgage.
- Primary Residency: The home you take a reverse mortgage on must be your primary residence. This means you should be living there for the majority of the year.
- Eligible Property Types: There’s a range of properties that qualify, including single-family homes, owner-occupied 2-4-unit buildings, townhouses, approved condominiums, and certain types of manufactured homes.
- Mandatory Counseling Session: You’re required to participate in a HUD-approved counseling session about reverse mortgages. This session, which can be done over the phone or in person, is crucial for ensuring you fully understand what getting a reverse mortgage entails.
- Financial Assessment: Applicants undergo a thorough financial assessment. This assessment checks your ability to keep up with key financial responsibilities like property taxes and homeowners’ insurance payments after receiving the reverse mortgage.
Meeting these requirements is essential not just for obtaining a reverse mortgage but also for making sure that it’s a suitable financial tool for your situation.
How Much Can You Get From a Reverse Mortgage
When considering a reverse mortgage, a key question is: how much can you borrow? The answer varies, typically ranging from 35.7% to 71.6% of your home’s value. This amount is determined by several factors, ensuring that the loan is tailored to your specific situation.
Factors Influencing Your Loan Amount:
- Your Age: The age of the youngest borrower is a crucial factor. Generally, the older you are, the higher the percentage of your home’s value you can borrow.
- Choice of Reverse Mortgage Program: Different programs have different borrowing percentages.
- Current Interest Rates: These rates play a significant role in determining how much you can borrow.
Understanding Loan Limits:
- The lending limit for the 2024 HECM (Home Equity Conversion Mortgage) program is capped at $1,149,825.
- If you’re considering a jumbo loan program, the limit can go up to $4,000,000, depending on your home’s value and other qualifying factors.
Get a Personalized Estimate with ARLO™
For a more specific estimate tailored to your circumstances, consider using ARLO™, a unique reverse mortgage calculator. ARLO™ provides real-time rates and eligibility information. More than just a calculator, ARLO™ offers personalized guidance to help you select the reverse mortgage program that best fits your financial needs.
Reverse Mortgage Payment Options
Reverse mortgage borrowers have several options for receiving their loan proceeds, each tailored to different needs and financial strategies. Understanding these options is crucial for making an informed choice:
- Line of Credit
- Usage Flexibility: Borrowers can draw funds as needed, aiding in managing living expenses.
- Growth Potential: The unused line of credit grows over time, increasing available funds.
- Ideal for Future Planning: Beneficial for those who don’t need immediate funds but desire a financial backup.
- Term and Tenure Payments
- Term: Offer fixed payments for a specified duration. This can be a strategic choice for those planning to defer Social Security benefits, providing income support in the interim. For example, a 65-year-old deferring Social Security until 70 could use term payments for income during those five years.
- Tenure: Guarantee monthly payments for the loan’s lifetime, continuing even if the payments surpass the home’s value. These payments cease only upon the borrower’s death or permanent relocation. It’s important to continue paying taxes and insurance to avoid loan default.
- Combination: Modified plans combine fixed payments with a line of credit, offering stability and flexibility.
- Lump-Sum Disbursement
- Lump Sum: Suitable for significant immediate expenses like home renovations or medical bills or to pay off a substantial existing mortgage.
- Fixed-Rate: Allows you to determine the equity portion to use up to the maximum loan amount. For instance, if you are eligible for $80,000 but need only $30,000 for renovations, you can opt for the lower amount.
- Closed-End: This fixed-rate option prevents future borrowing against unused loan amounts. Any additional funds needed would require refinancing the loan.
When selecting a disbursement option, it’s essential to consider your financial goals and needs. Also, explore our guide, “Unpacking the 3 Types of Reverse Mortgages,” for more detailed information on each option.
Reverse Mortgages for Home Purchase
The Reverse Mortgage for Purchase program is designed to aid older Americans in maintaining greater financial flexibility and improved cash flow. This program particularly benefits those looking to buy a retirement home without fully paying in cash or taking on a new traditional mortgage payment.
- Simplified Requirements: The qualification process for a typical Reverse Mortgage for Purchase (often referred to as Home Equity Conversion Mortgage for Purchase or H4P) is generally more straightforward for senior borrowers. This is due to the program’s more lenient underwriting standards, which do not rely on debt-to-income ratios for income qualification.
- Alternative to Cash Buyer: The HECM purchase program offers a valuable alternative for those who prefer not to pay the entire home cost upfront in cash while simultaneously eliminating the need for monthly mortgage payments.
- Ideal for Non-traditional Financing Candidates: This program is particularly advantageous for borrowers who may find it challenging to qualify for conventional financing due to its more accommodating qualification criteria.
Overall, the Reverse Mortgage for Purchase program offers a practical solution for seniors seeking to buy a home in retirement without the financial constraints of traditional mortgage products.
Explore our purchase guide, “Reverse Mortgage Purchase: Down Payment, Rates & Eligibility,” for more detailed program information.
Current Interest Rates
- Adjustable rates from 6.740% (1.750 margin)
- Fixed rates from 7.560% (8.996% 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:
- To review your unique financial situation.
- To 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 reverse mortgage lender, we must provide a list of at least 10 counseling agencies from which to choose. 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).
Repayment and Loan Maturity
Reverse mortgages offer a unique financial arrangement, as they don’t require monthly payments while the borrower(s) reside in the home. The loan’s repayment is triggered under specific conditions, mainly when the last original borrower permanently vacates the property.
This could occur due to several reasons, such as the borrower’s passing, relocation to an assisted living facility or a family member’s home for care, or the decision to sell the home.
When Repayment Becomes Necessary
The loan must be repaid once it becomes due. Borrowers and heirs should be prepared for this eventuality.
Here are some recommended steps to ensure a smooth process:
- Title Transfer to Heirs: Secure the property’s title in the heir’s name. This could involve adding heirs to the title even before the borrower’s demise as long as one original borrower remains on the title. Since probate might be necessary after the borrower’s death, consulting with an estate attorney beforehand is advisable to navigate your situation and state laws effectively.
- Property Valuation: Engage a local real estate expert to estimate the home’s probable selling price accurately.
- Loan Balance vs. Property Value: Assess the home’s value or probable selling price against the loan’s outstanding balance.
- Making a Decision: Based on this information, decide whether to refinance the loan, clear it with other funds, or sell the property. The loan’s balance can be settled if the home’s value and probable selling price indicate equity. However, heirs can pay only 95% of the current home value to retain the property, even if the loan balance is higher.
Non-Recourse Loan Benefits
A reverse mortgage is a non-recourse loan, meaning if the heirs choose not to retain or sell the property, they can allow the lender to claim it. In such cases, the lender’s recourse is limited to the property. Importantly, even if the loan balance surpasses the property’s value, the heirs are not liable for the excess amount.
Navigating the repayment and maturity of a reverse mortgage requires careful planning and consideration. Understanding your options and preparing accordingly is crucial to ensure a smooth transition during this phase. Consulting with professionals in real estate and estate planning is highly recommended to make well-informed decisions.