Simple Math and Reverse Mortgage hints

Too much math in reverse mortgages to make sense to you?

OK, lets look at the simple numbers.

1st Number: The amount of money that is available to you. There is a number on each reverse mortgage that the government puts out that tells you how much money you can get. It is a percentage. The number for a 62 year old today is 0.5527, which means that you can get 55.27% of the equity in your home. (Example : $200,000 home with no mortgage on it. A 62 year old can get $110,540 in cash and have no mortgage payment for the rest of their life)

2nd Number: The interest rate. The interest rate on the most popular reverse mortgage loan is "The ten year treasury bill +1.5%". You can call any bank or broker to find out the price of the 10 year treasury bill. Simply take that number and add 1.5 to it...thats your interest rate on that product.

3rd number: Line of credit growth. This is the amount of growth that your line of credit experiences. This is your interest rate +0.5%. (They call it growth because it is not taxable like interest.) Because the credit line is compounded daily it is best to look at your statements each month to see the growth.

Hints:

1) Your loan amount is growing by the 2nd number I listed above. Just because you do not have any payments due, does not mean that you can't pay on that amount. Be smart. If you have extra money that is earning less than the interest rate on your loan, pay it down. The amount you pay into the loan goes immediately to the credit line. You have access to that credit line at any time. (It takes 5 business days or less for you to receive that cash.) Treat a reverse mortgage like YOU are the bank. Put your money where it works best for you. The reverse mortgage credit line is backed by the bank and by HUD.

2) HUD allows banks to charge $25, $30, or $35 for servicing your reverse mortgage. There is really no difference between the numbers except for what a bank wants to charge you. Always push to get the $25 service fee...it will save you $120 a year.

Bob

bob@az62.com

www.az62.com

623-214-6663