Typically 50-80% for a HELOC or 80-90% for a Home Equity Loan.
Available Equity for Loan:
$0.00
Understanding Your Mortgage Reverse Calculator Results
A mortgage reverse calculator, also known as a home equity calculator or a cash-out refinance calculator in some contexts, helps homeowners understand how much equity they can potentially access through a home equity loan or a Home Equity Line of Credit (HELOC).
Home equity is the difference between your home's current market value and the amount you still owe on your primary mortgage. Lenders offer loans based on a percentage of this equity, often referred to as the Loan-to-Value (LTV) ratio. This calculator helps you estimate this potential borrowing power.
How the Calculation Works:
The calculation is straightforward but relies on several key inputs:
Current Home Value: The estimated market value of your property. This can be determined through a professional appraisal, comparative market analysis (CMA), or online valuation tools.
Remaining Mortgage Balance: The outstanding principal amount on your first mortgage.
Maximum Loan-to-Value (LTV) Ratio: This is the maximum percentage of your home's value that a lender is willing to lend against. It's calculated as (First Mortgage Balance + New Loan Amount) / Home Value. Lenders set this limit. For example, an 80% LTV means the total debt secured by your home cannot exceed 80% of its value.
Estimated Appraisal & Closing Costs: These are fees associated with obtaining a new loan, such as appraisal fees, title insurance, origination fees, and recording fees. These costs reduce the amount of cash you actually receive.
The formula used is:
Maximum Allowable Loan Amount = Current Home Value * (Maximum LTV / 100)
Total Equity Available = Maximum Allowable Loan Amount - Remaining Mortgage Balance
Available Cash After Costs = Total Equity Available - Estimated Appraisal & Closing Costs
Interpreting the Results:
The calculator provides an estimate of the Available Equity for Loan. This is the maximum amount you could potentially borrow, after accounting for the lender's LTV limits, your existing mortgage, and the costs associated with taking out the new loan.
Use Cases:
Home Improvements: Fund renovations or upgrades to increase your home's value and comfort.
Debt Consolidation: Combine high-interest debts (like credit cards) into a single, potentially lower-interest loan secured by your home.
Education Expenses: Pay for tuition, fees, or other educational costs for yourself or family members.
Emergency Fund: Access funds for unexpected medical bills, job loss, or other emergencies.
Investment Opportunities: Utilize equity for investments, though this carries higher risk.
Important Considerations:
This calculator provides an estimate. Actual loan amounts, interest rates, and terms will vary based on the lender, your creditworthiness, the specific loan product (home equity loan vs. HELOC), and prevailing market conditions. It is crucial to consult with multiple lenders and financial advisors to get precise figures and understand the full implications of borrowing against your home equity. Remember that borrowing against your home means your home could be at risk if you cannot repay the loan.
function calculateReverseMortgage() {
var homeValue = parseFloat(document.getElementById("homeValue").value);
var remainingMortgage = parseFloat(document.getElementById("remainingMortgage").value);
var loanToValue = parseFloat(document.getElementById("loanToValue").value);
var appraisalFee = parseFloat(document.getElementById("appraisalFee").value);
var resultDiv = document.getElementById("result");
var resultAmount = document.getElementById("resultAmount");
if (isNaN(homeValue) || isNaN(remainingMortgage) || isNaN(loanToValue) || isNaN(appraisalFee)) {
alert("Please enter valid numbers for all fields.");
resultDiv.style.display = 'none';
return;
}
if (homeValue <= 0 || remainingMortgage < 0 || loanToValue 100 || appraisalFee < 0) {
alert("Please enter valid values. Home value and LTV must be positive, remaining mortgage and appraisal fees cannot be negative.");
resultDiv.style.display = 'none';
return;
}
var maxLoanAmount = homeValue * (loanToValue / 100);
var totalEquityAvailable = maxLoanAmount – remainingMortgage;
if (totalEquityAvailable < 0) {
totalEquityAvailable = 0;
}
var availableCashAfterCosts = totalEquityAvailable – appraisalFee;
if (availableCashAfterCosts < 0) {
availableCashAfterCosts = 0;
}
resultAmount.innerText = "$" + availableCashAfterCosts.toFixed(2).replace(/\d(?=(\d{3})+\.)/g, '$&,');
resultDiv.style.display = 'block';
}