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The reverse mortgage is a great way for senior citizens to convert the equity in their homes into a regular income. Whenever you start to look at how much money you are going to receive every month from the lender, there are a few things that could affect your payment. Here are a few factors that affect reverse mortgage payouts.
1. Interest Rates
With a reverse mortgage, the entire amount of the loan will depend on how much home-equity you have. Since you will not be required to make any payments, all of the interest is going to come out of the value of your equity. This means that the higher the interest rate on the loan, the lower your monthly payment is going to be.
2. Closing Costs
The closing costs on the loan will also play a vital role in how much money you are going to be able to receive every month. In many cases, the closing costs are going to amount to several thousand dollars. This amount of money will be taken out of the equity in your home, which is going to reduce your monthly payment.
3. Loan Amount
Many reverse mortgage programs have maximum loan amounts that they have to adhere to. If the maximum loan amount is less than the value of your home, they will be able to provide you with only the maximum loan amount instead of your total equity.
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