How does the lender determine the max I get with a reverse mortgage? Read here for how a lender determines how much you will get!
While many senior citizens opt for a reverse mortgage as a way to raise cash flow, the actual way a lender determines how much they get can be quite confusing. There are a few considerations that a lender takes to determine how much you will get.
Your Age
The first consideration that a reverse mortgage lender takes to determine the max you get with a reverse mortgage is your age. To qualify for a reverse mortgage you must be at least 62 years old, however, the younger you are the less proceeds you will obtain via a reverse mortgage. This is because the reverse mortgage lender wants to ensure you do not spend all of your equity, and the younger you are the more time you have to spend all of the money.
Value of Your Home
The next consideration that a reverse mortgage lender takes to determine the max you get with a reverse mortgage is the value of your property. A reverse mortgage lender normally will cap the proceeds available to you at a certain percentage of your home’s value. Depending on the lender and your age, this could be as high as 80% of your home’s value. To determine the value of your home you will need to order a full appraisal.
Form of Receiving Proceeds
The third consideration that a reverse mortgage lender takes to determine the max you get with a reverse mortgage is form of receiving proceeds that you select. You will have the option to either receive a lump sum payment or receive monthly installments. Since monthly installments provide much less risk to a reverse mortgage lender, the borrower will receive much more proceeds by selecting installments over the lump sum payout.
Related posts: