Reverse Mortgage Interest Rates
What are the rates for the reverse mortgage?! All homeowners want to know one thing when refinancing. What is the rate?! Is it fixed or adjustable?
We are preconditioned after years of owning and refinancing to want to know that much information within the first 60 seconds.
However, with a reverse mortgage the rate conversation takes a little turn for the unexpected.
What if I was to say that although the fixed rate reverse mortgage programs are great the adjustable rate programs actually make up approximately 85% of the loans funded in 2018? Would that surprise you?
Before you huff at me and click back to review another websites article let’s take a look at reverse mortgage rates 🙂
Reverse Mortgage Interest Rate Comparison
When deciding between which reverse mortgage works best it will inevitably come down to deciding between a fixed rate reverse mortgage and an adjustable rate reverse mortgage.
Both the fixed and adjustable rates offer advantages that many homeowners have come to love.
Fixed Rate Reverse Mortgage Programs
Fixed rates are what everyone knows and loves.
Odds are if you have had a mortgage or two over your lifetime then you are very familiar with fixed rates and how they work.
Well a reverse mortgage is is no different.
The fixed interest rates on a reverse mortgage are fixed for life. This means that they will never change or readjust.
How the fixed rates apply to the reverse mortgage mainly revolves around how you are able to take the available money you qualify to receive.
Fixed rates reverse mortgage programs require that the money be taken at funding as a lump sum, cash-out only payment.
Example: If a homeowner qualified to receive $100,000 with the reverse mortgage interest rate that they selected then the fixed rate program would require the homeowner take that $100,000 as a lump sum disbursement at closing.
Not bad right!
The fixed rate reverse mortgage programs are considered “closed-end” loans meaning once the loan funds and all the money is disbursed then that is it! Everyone has what they need and all is complete!
Adjustable Rate Reverse Mortgage Programs
I know you are still shocked to here that the majority of homeowners choose the adjustable rate reverse mortgage, but let’s find out why that may be.
The adjustable interest rate reverse mortgage programs offer a little more flexibility in how homeowners can receive the money they qualify for at funding.
While the fixed rate programs offer only the lump sum option the adjustable rate reverse mortgage programs offer a few different ways homeowners can take their proceeds.
Line of Credit – Homeowners can utilize a line of credit feature. Do you have $100,000 available to you, but the only this is you don’t need it all?
Good problem to have, right? Well this is where a line of credit can come in handy, because any money that is left in a line of credit will not be part of the loan balance therefore will not accrue interest charges.
In addition, the line of credit has a growth rate attached, so homeowners will actually see their available money grow from month-to-month. Worth being noted that this is addition money that can be drawn and added to the loan balance and is not money being made like on an interest bearing account.
Monthly Payout – Homeowners can also choose a monthly payout.
Do you have $100,000 available to you, but don’t need it all and don’t necessarily care to manage it in a LOC?
Then a monthly payout is a great option to supplement your monthly income!
You can request that servicing pays you “x” each month as a term payment, or as a payment that can be setup to last the rest of your life.
Lump Sum – Adjustable rate programs also offer the option the take a lump sum payment just like you can with the fixed rates.
Combo – Combo them up! If you want a lump sum, line of credit and a monthly payout then you are able to accomplish that too. You can choose any combo of just one, or all three.
Depending on how much you qualify to receive with the reverse mortgage interest rate you select might help dictate, which of these reverse mortgages are best for you.
Find only the best reverse mortgage for you
Reverse Mortgage Index Rate & Margins (Adjustable Rates Only)
Reverse mortgage rate margins apply to adjustable rate reverse mortgages.
The adjustable rates are based on a margin + index rate.
Index rate = 1-month LIBOR or 1-year LIBOR. Depending on the program you select.
Margin = The reverse mortgage rate applied on top of the index rate.
The margin is a interest rate that remains fixed for life. It never readjusts or changes.
The only interest rate that adjusts on an adjustable rate reverse mortgage is the index rate.
The index rate will adjust every month, or every year, depending on if you select a monthly adjusting or annual adjusting interest rate.
Each program does have safe guards, which offer a lifetime cap on the interest rate along with an annual cap for the annual adjustable.
Reverse Mortgage Interest Rate Calculator
Now that you have a more detailed picture on how the reverse mortgage rates work you might be looking for a reverse mortgage rate calculator.
In our experience the online reverse mortgage rate calculators can show programs that may, or may not, be currently accessible.
We encourage you to use our ReverseAdvisors.org reverse mortgage advisor search.
It allows you to see top reverse mortgage companies and advisors that work in your state and might even specialize in your county.
ReverseAdvisors.org feels this is the best way for you to start to review your current reverse mortgage rates available.