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You want to get a reverse mortgage that will give you monthly income for the next 20 years. The house is worth $400,0000. The term is 20 years. The rate is 6%. What are the monthly payments?

I understand that with a reverrse mortgage, you are receiving payments insteas of making them. My question is, do you calculate a reverse mortgage the same way you calculate a mortgage? I calculated monthly payments of $2,866. Is this correct? Any and all help would be greatly appreciated.

Marley Chatthews
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  • I have the same conclusion as you: To my understanding a reverse mortgage is not any different than a normal mortgage: for the principal 400000 and the interest 6% which monthly payment would result to zero debt at the end of the 20th year. The monthly payment would be around 2866.67. – surfmuggle Mar 12 '17 at 16:12

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The amount of the monthly payments you can get from a reverse mortgage is based on a number of factors. The value of the property, the age of the youngest borrower and the current interest rate are used to calculate the amount of equity you will be able to access. The amount you will be able to access is broken down into monthly payments. All existing liens must be paid off first with the reverse mortgage proceeds. Even if you own your property free and clear you will not be able to access 100% of the equity. I think you will be quite surprised at the small amount you can get.

You can find out how much money you can access and what monthly payments will be by going to the following free link (you don't have to enter any personal identifying information) http://www.reversemortgage.org/About/Reverse-Mortgage-Calculator FYI the most important factor when considering a reverse mortgage is to determine if it's right (suitable) for your circumstances or if it is wrong (harmful). Sandy Jolley, Reverse Mortgage Suitability and Abuse Consultant

sjolley2
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