How do I enter income from taking a reverse mortgage?

I currently have about $57K in mortgage. In about 4 years, I plan to take a reverse mortgage, using the proceeds to pay off the mortgage and then spending the remainder as needed. How should this be entered? I thought of just using special expenditures and special receipts, but that doesn't eliminate the monthly mortgage payment I have today. I also thought of using First Change in home by showing the sale and subsequent purchase of a new home with no loan. Please advise. Also, is there a way to model using a monthly payment from the reverse mortgage provider vs. taking a lump sum payout? Thx


I think there are some posts on this from the old forum.

Here's my view...

1. Enter your current mortgage, monthly payment, etc. for now.
2. In 4 years, enter first change of home as you describe with no loan. It may still make sense to include property taxes, insurance, some maintenance, but that's up to you. You could eliminate all housing equity (e.g. paying off mortgage plus reverse mortgage) to simplify your calculations and inputs to ESPlanner.
3. You'll need to do side calculations on the income (monthly or lump sum) from the reverse mortgage. This would lead to either a series of annual special receipts or a lump sum special receipt. Try modeling both to see which works best for you.
4. Once you get your "primary home" inputs set up, make a copy of your profile. Now that you have two profiles, set one up for annual special receipts and the other for a lump sum and compare. Of course, both are sensitive to the actual values input (e.g. based on interest rates, when you start the reverse mortgage, how long, how much, taxes, etc.), but you can test these out to see which seems best now and repeat in the future when you get closer to your actual event.


Thanks...that tracks pretty well with which I was toying.

dan royer's picture

Very good Brian.

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