If you are 62 years or age or older and in need of money, you should consider the benefits of a reverse mortgage. This allows you to convert equity in your home into cash – without having to sell the property or add another monthly expense.
With a “traditional” mortgage you make payments to the lender. With a reverse mortgage the roles are reversed. Instead, you receive money from the lender and do not have to pay it back as long as you stay in your home. The loan is repaid when you die, when the home is no longer your primary property, or when you decide to sell.
Details of Reverse Mortgage Rates
There are both fixed rate and variable rate reverse mortgage products. That being said, variable rate reverse mortgages are the more popular of the two. These are attached to a financial index, and will adjust with market conditions.
Before 2007, variable rate reverse mortgage products were your only option. As noted above, this is no longer the case. If you do opt for a variable rate product, the rate can adjust monthly, semi-annually, or annually.
The reverse mortgage program that you choose will have a lot to do with the rate you receive. Generally speaking, rates should be below those of a standard mortgage because the loan is secured by the home.
Finally, the type of reverse mortgage that you get will go a long way in determining the rate. Your three options include: single purpose reverse mortgage, federally insured reverse mortgage, and proprietary reverse mortgage.
As you can see, there are many details that influence reverse mortgage rates including the type of mortgage and market conditions.