Reverse Mortgage Loan Rates
Below are current reverse mortgage loan rates. If you have any questions about the rates, please don’t hesitate to call 1-888-888-4834 or Request a NO Obligation quote.
|Updated: August 11, 2020||HECM Fixed Rate||HECM Adjustable Rate (Annual)||Jumbo Fixed (Proprietary)||Jumbo Adjustable (Proprietary)|
|Current Rates||3.43% - 4.18%||2.49% - 3.199%||5.99% - 7.125%||5.5% - 5.503%|
|APR||3.98% - 4.68%*||N/A||7.19% - 8.224%**||N/A|
|Margin||N/A||2.00 - 2.75||N/A||4.875% - 5.25%|
|Monthly Service Fees||$0||$0||$0||$30|
|Lending Limit||$726,650||$726,650||Max Loan: $4,000,000||Max Loan: $4,000,000|
2023 HECM lending limits are $1,089,300. Call 888-888-4834 for details.
Rates and Fees are subject to change without notice. These rates are for comparison purposes only. This is not an offer or commitment to lend at any set terms.
As you can see above, there is a range shown for all rates. The reason for that is we give you the option to choose the best rate that best suites your individual situation. The general rule of thumb is that the lower the rate, the higher the origination fee will be. It’s a lot like “buying the rate down” on the forward side. When we discuss your scenario over the phone, we will give you all the details that go along with each rate, which includes a breakdown of all fees involved. Use our reverse mortgage calculator to see an estimate of what’s available to you.
The Total Interest Rate charged to a reverse mortgage loan is equal to the Margin + Index + Monthly Mortgage Insurance of 0.50%
Choosing Fixed Rate vs. Adjustable Rate Reverse Mortgage Loans
Many seniors we speak to are dead set on a fixed rate reverse mortgage loan. Well, although it sounds like the most financially “stable” and conservative decision, it is worth exploring all options since the adjustable rate has more flexibility in terms of how you receive loan proceeds. When making a decision, remember that changes in your interest rate do not affect your monthly benefit as you are not making monthly payments. Fixed rate reverse mortgage loans require that you take a full draw at closing. With a reverse mortgage loan, you accrue interest on only the money that’s been drawn. If you have a large payoff or wish to take all funds available to you at closing, then a fixed rate reverse mortgage loan may be your best option. On the flip side, if you do not need all the money that’s available to you, a fixed rate reverse mortgage loan may not be your best option. With an adjustable rate reverse mortgage loan, you can set up a line of credit, monthly payments, a lump sum or a combination of any of these. In a line of credit, interest is not accrued until you receive the money.
Fixed Rate Reverse Mortgage Loan Solutions:
The fixed rate Home Equity Conversion Mortgage (HECM) eliminates the risk of adjustable-rate mortgages. With the HECM Fixed Rate loan, the borrower has the comfort of knowing exactly what their interest rate will be for the life of the loan and the certainty that the rate will never increase. In addition, since the interest accrual is known, borrowers will have the comfort of knowing exactly how much they may pass on to their estate. Borrowers must take a full draw at closing.
Adjustable Rate Reverse Mortgage Loan Solutions:
Adjustable rate reverse mortgage loans have by far been the most popular reverse mortgage loan to date. There are two types of adjustable rate reverse mortgage loans. Annual and monthly adjustable. The annual has an interest rate that adjusts once a year and is based on the 1 Year LIBOR, while the monthly has a rate that adjusts every month and is based on the 1 Month LIBOR. The annual adjustable HECM is our most popular product since it provides the most flexibility with payment plans and in an environment where rates are rising, a once a year adjustment seems more attractive to many than a monthly adjustment.
LIBOR stands for “London Inter-Bank Offered Rate.” It is based on rates that contributor banks in London offer each other for inter-bank deposits. From a bank’s perspective, deposits are simply funds that are loaned to them. So in effect, a LIBOR is a rate at which a fellow London bank can borrow money from other banks. Rate calculations are complex as they incorporate variables such as time, maturity and currency rates. In October of 2007, the Federal Housing Administration (FHA) ruled in favor of allowing the LIBOR index to be used for reverse mortgage loans in addition to the Treasury (CMT). LIBOR loans in general carry lower margins than the CMT (Constant Maturity Treasury).
The Effect of Interest Rates on Your Available Loan Proceeds
Interest rates have a direct impact on the amount of proceeds available to you on a reverse mortgage loan. The impact is seen on the principal limit. The principal limit is defined as the amount of money a reverse mortgage borrower can receive before expenses and payoffs are removed. The principal limit is calculated by multiplying the borrowers maximum claim amount (lesser of home value or the lending limit, currently at $679,650) by the principal limit factor (PLF).
The chart below shows a sample of PLF’s for borrowers ranging from 62-95, assuming a 5.0% expected rate.
|Borrower Age||PLF (Percent of Home Value)||Home Value: $250,000||Home Value: 350,000||Home Value: 450,000||Home Value: 550,000||Home Value: 650,000|
PLF tables source: https://www.hud.gov/sites/documents/august2017plftables.xls
Reverse Mortgage Loan Refinance (HECM to HECM):
Best Rates on HECM Reverse Mortgage are still extremely low, but as they increase less proceeds will be available. It may be a good time for you to explore the option of a refinance now.
Call one of our specialist to determine if it makes sense to refinance your reverse mortgage loan. (888) 888-4834.
Jumbo Reverse Mortgage Loans:
We have a robust product offering for Jumbo reverse mortgage loans, also known as proprietary reverse mortgage.
Purchase Reverse Mortgage Loan Solutions:
Beginning January 1, 2009, FHA began insuring reverse mortgage loans for Seniors to purchase homes. Reverse mortgage loans have traditionally been available for refinance loans in the past, provided the Senior resided in the home. Reverse Mortgage Loan for Home Purchase.
* APR Assumptions HECM Fixed Rate:
* APR Example – 70 year old borrower. 4.56% Fixed Rate, appraised value $300,000, initial principal limit of $147,900. APR would be 6.197%, including the 0.50% annual MI.
* APR Example – 70 year old borrower. 5.06% Fixed Rate, appraised value $300,000, initial principal limit of $139,500. APR would be 6.315%, including the 0.50% annual MI.
** APR Assumptions Jumbo Fixed Rate:
** APR Example – 70 year old borrower. 5.99% Fixed Rate, appraised value $3,000,000, initial principal limit of $1,041,000. APR would be 6.229%.
** APR Example – 6.99% Fixed Rate, appraised value $3,00,000, initial principal limit of $1,242,000. APR would be 7.224%.