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'Interest Rates' Category Archives

Which is Best? Fixed vs. Adjustable Rate Reverse Mortgages

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If you have made the decision to stay in your home, but you are not sure if your savings will last, a reverse mortgage may be the solution to help you achieve that goal. Different reverse mortgage types serve different purposes and as with any mortgage you must consider which program and rate option are best suited for you. Just like any other...
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Reverse Mortgage Fixed Rate & Unusable Funds Explained

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If you have decided that you’d like to use a reverse mortgage to tap into your home equity while remaining in your home, there are several considerations that will help you determine how to make the most out of your loan. A reverse mortgage can be an excellent way for some households to boost their cash flow in retirement, establish...
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Advantages and Disadvantages of Fixed Rate Reverse Mortgages

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Fixed Rate Reverse Mortgages – which is right for you? Many senior borrowers have been raised on the idea that a fixed rate loan is the “only way to go”. Still others remember back to the early 80’s when interest rates climbed as high as 18%. Some borrowers experienced rising interest rates from adjustable rate loans (or knew others who...
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Reverse Mortgage CMT (Treasury) Index as Transition to SOFR

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Overview With GNMA’s recent announcement, HECM ARMs using LIBOR as their Index will soon not be viable to originate. While LIBOR has been destined to be phased out for some time, this unexpected announcement will require a faster transition than was expected. The framework around SOFR, the anticipated replacement to LIBOR, has not been fully developed yet, and as such...
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How the SOFR Index Affects Reverse Mortgage Rates

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For several years, adjustable rate reverse mortgages used a variety of indexes which determine a benchmark interest rate that when added to a margin set by the lender, would determine the final interest that borrowers would accrue on their loan. The rules for the choice of an index is that it had to be out of the lender’s control and...
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How the Reverse Mortgage Margin & Libor Rate Works

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One of the key questions that always surrounds any reverse mortgage is how much money you, as the borrower, will be able to draw from the loan. The amount of money you can get from the proceeds of a reverse mortgage is primarily based on two important factors: your age, and the loan’s interest rate and margin.  Typically, older...
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Reverse Mortgage Expected Rate is Key to the Principle Limit

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Most people are aware that they receive a percentage of their home's value or the Government lending limit (whichever is less) based on their age when qualifying for a Reverse Mortgage loan. However, what many consumers are not aware of is the effect of the "Expected Interest Rate" as it correlates to their available proceeds on a Reverse Mortgage loan. The...
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Understanding the Reverse Mortgage Amortization Schedule

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What is a reverse mortgage amortization schedule? Once you have decided that a reverse mortgage is right for you, it’s important to look at the amortization schedule. A reverse mortgage amortization schedule is a document that will provide a best estimate of how the loan could grow over time. Unlike a traditional loan, a reverse mortgage is a negative amortized...
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2018 Reverse Mortgage Interest Rates On The Rise!

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What Rising Interest Rates in 2018 Mean for Reverse Mortgage Borrowers Interest rate increases impact reverse mortgage borrowers differently from how they impact forward mortgage borrowers. While gains in short-term rates have a minimal effect on the amount of loan proceeds reverse mortgage borrowers may be eligible to receive, hikes in longer-term rates can significantly reduce their borrowing power over...
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Reverse Mortgage Interest Rate Cap Explained

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Can the loan balance grow beyond the value of the house? I thought there was a cap of 60% of the value of the house? There is no "cap" on the amount of interest that can accrue. In many cases, especially if the value of the home declines as they have done in recent years, the balance of the...
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