Use a Reverse Mortgage to Supplement Your Retirement Portfolio

And greatly increase the chance of meeting your spending goals.

To download the Ibis 'white paper' that provides the background for these calculations, click JFP December 2013.
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For a quick start, click        If you're comfortable, click  
      Client Info              
    Dates Month     Day Year  
    Borrower Birth Date       The youngest borrower must be at least 62 on the reverse mortgage loan's closing date.
    Co-Borrower Birth Date      
    Reverse Mortgage Closing Date       Say 60 days from today
      Borrower     Co-Borrower      
    Gender (for Mortality Engine)       1 = Female,  2 = Male
    Health (for Mortality Engine)       1 = Excellent,  2 = Average
    Zip Code     Just 5 digits, not zip + 4
    Home Value     Best estimate of what a current appraisal would be.
    The new reverse mortgage must be the only lien against the home.
  • Liens being paid off that are attributable to home acquisition and/or home improvement debt can likely be carried forward when considering what portion of the reverse mortgage accrued interest may be deductible in the future.  
  • No longer making mortgage payments is a benefit to be considered in your retirement planning. An estimate of the deductible portion, for example, 50%, will allow calculation of the tax-equivalent monthly savings.
    Total Liens to be Paid Off        Lien against the home.
      Home Acquisition or Improvement     Dollar amount of Total to be carried forward for future calculations.
    Monthly Lien Payments     No more payments increases retirement spending.
      Current Liens % Deductible %   Interest Portion of Current Mortgage Payments.
    How many months to go?     Benefits from retiring the lien will be carried that far into the future.
    Portfolio Value     Current Market Value
    Portfolio Cost Basis     Current Cost Basis in Dollars
    Portfolio Yield (%) %   Dividends and Interest Taxed as Ordinary Income
    Marginal Tax Rate %   Combined Federal and State Tax on Ordinary Income
    Capital Gains Tax Rate %   Combined Federal and State Tax on Long-term Gains
  Reverse Mortgage Inputs          
    Desired Upfront Cash     Upfront Cash can be used as you wish, and the Creditline can be a reserve, but any money not allocated to monthly advances will lower the 'spending success' results of the model.
    Desired Creditline    
  HECM Product Info              
    Choose a Loan Program                           The HECM Choice requires a 60% upfront draw so may not be the best for long-term retirement spending.
    Lender's Origination Fee
    Adjusting Period          
    Lender's Margin                         %   Suggest three or more lenders; clients seek their own best deal.
    Monthly Service Fee     Seldom used now, but will likely return at $30 or $35 per month.
  Portfolio Supplement              
    Desired Portfolio Draw Rate %   For example, 6.0% in the first year
    Planning Horizon     Retirement Spending Years likely 30 or more
    Interim Year to Inspect     15 years out is a good starting point
  Monte Carlo Inputs              
    Annual Rates Mean     Std. Dev.        
    Portfolio Returns %   %   Enter arithmetic averages, not geometric returns, the  software does all of the appropriate transformations.
    Inflation (CPI) %   %  
    Home Appreciation %   %  
    1-month LIBOR %   %  
    Running 2,000 Monte Carlo iterations thru thousands of calculations over forty years takes less than 5 seconds. You can request versions with fewer iterations to quickly compare alternatives, then make a Full Run on the final scenarios.
    To see results from 2,000 iterations, click >>      
      Questions? Call Jerry Wagner at Ibis. 510-217-8775

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