Aig Reverse Mortgage Calculator

Expert Reviewed: This calculator and content have been reviewed for accuracy by David Chen, CFA.

Welcome to the **aig reverse mortgage calculator**. This tool provides a simplified estimate of your potential loan principal limit based on key factors like home value, expected interest rate, and your age.

aig reverse mortgage calculator

Enter any three values to solve for the missing one. For the most common scenario, leave the Principal Limit blank.

Calculation Steps:

aig reverse mortgage calculator Formula:

Reverse mortgage Principal Limit (PL) calculation is complex, relying on actuarial tables. For this tool, we use a simplified, illustrative model where the PL Factor (PLF) is approximated by age and rate to demonstrate the required calculation logic:

Simplified Formula:

$$\text{PL} = \text{Home Value} \times (1 – \frac{\text{Rate}}{100}) \times (1 + 0.01 \times (\text{Age} – 62))$$

Formula Source: Consumer Financial Protection Bureau (CFPB) on Reverse Mortgages Additional Source: HUD HECM Library

Variables:

• Current Home Value: The appraised value of your home, used as the basis for the loan.
• Expected Interest Rate (%): The rate used by the lender to calculate the principal limit. Lower rates typically result in a higher PL.
• Youngest Borrower Age: Since reverse mortgages are age-restricted (62+), the age of the youngest borrower is a critical input to determine the maximum loan amount.
• Target Principal Limit: The maximum loan amount you wish to calculate or use as a known value to solve for another variable.

Related Calculators:

• HELOC Payment Estimator
• Lifetime Income Stream Calculator
• Retirement Savings Withdrawal Rate
• Home Equity Conversion Mortgage (HECM) Fee Calculator

What is aig reverse mortgage calculator?

An aig reverse mortgage calculator is a specialized financial tool designed to estimate the amount of money (the Principal Limit) a senior homeowner can borrow against the equity in their home. Unlike a traditional forward mortgage, a reverse mortgage—such as the Home Equity Conversion Mortgage (HECM)—does not require monthly mortgage payments. Instead, the loan balance grows over time.

The calculation is complex because the final loan amount is influenced by three primary factors: the home’s value, the current expected interest rate, and the age of the youngest borrower. Generally, the older the borrower and the lower the interest rate, the higher the Principal Limit. This calculator helps users quickly assess the potential financial resource available to them.

How to Calculate aig reverse mortgage calculator (Example):

Using the simplified formula for illustrative purposes:

1. Determine Home Value (V): Assume a home value of $300,000.
2. Input Expected Rate (I): Use an expected interest rate of 6%.
3. Input Borrower Age (A): The youngest borrower is 70 years old.
4. Apply Formula: PL = $300,000 \times (1 – \frac{6}{100}) \times (1 + 0.01 \times (70 – 62))$
5. Calculate PL Factor: Factor = $(1 – 0.06) \times (1 + 0.01 \times 8) = 0.94 \times 1.08 = 1.0152$
6. Final Result: PL = $300,000 \times 1.0152 = $304,560$ (This demonstrates the calculation process, though actual factors would vary).

Frequently Asked Questions (FAQ):

Who is eligible for a reverse mortgage?

The minimum age requirement for all borrowers is 62 years old. The home must also be the borrower’s principal residence, and they must participate in mandatory counseling with a HUD-approved counselor.

Is the calculated Principal Limit the cash I receive?

No. The Principal Limit is the maximum loan amount. Actual funds received are less due to mandatory loan costs, including origination fees, third-party closing costs, and Mortgage Insurance Premiums (MIP).

Does the loan need to be repaid?

The loan does not require repayment until the last surviving borrower moves out of the home permanently (for 12 consecutive months) or passes away. The repayment amount is limited to the home’s value or the loan balance, whichever is less (non-recourse loan).

Can I use this calculator for exact figures?

This is an estimation tool. For official figures, you must consult a HUD-approved HECM lender. The actual Principal Limit is determined by the specific rate and Principal Limit Factor (PLF) in effect at the time of your application.