Reverse mortgage interest rates

  • Post category:Blog
You are currently viewing Reverse mortgage interest rates

Reverse mortgage interest rates vary depending on the kind of interest rate that is applied to your application. Here are some of the different rates and how they differ from one another:

  1. Fixed interest rates. This kind of interest rate depends on the government agencies responsible for it and the investors/market. For example, Home Equity Conversion Mortgage (HECM) has a current fixed rate between 3.06% – 3. 68%, and the adjustable rates are between 1.57% – 2.57 %, and the lending limit is $822,375.  As always, for the latest and current rates, it is best if you talk to an originator about it.
  2. Variable Interest Rates. This is different from the fixed interest rates and has two prongs – Margin and Index.
        • Index – this is the standard rate, and it changes depending on the interest rates in the market. The lender has no control over this, and it can go down or up depending on the index.
        • Margin – is the percentage of the interest that the lender adds to the index rate. After your loan is approved, whatever the approved margin interest is, it stays until the loan matures, even if the index changes.

What are the pros and cons of a fixed-rate reverse mortgage loan? One of the pros is that there is no risk of the rates increasing as it is fixed. The borrower is protected even if the market rates increase. But on the flip side, the borrower has no choice to get the money as a lump sum. A fixed-rate reverse mortgage is a good option if you need to use the proceeds at once – pay off another debt or repair your home.

The variable rate reverse mortgages may not be the most availed option, but it offers more flexibility. For one, you only get charged for the interest of the money that has been withdrawn.  So think about it as an open line of credit. The downside of variable interest rates is the risk of drastically changing rates.

If you need more information about reverse mortgage interest rates, we would be glad to give you updated rates and information.