“As the United States has become an older nation, reverse mortgages have grown into a $20-billion-a-year industry, with elderly homeowners taking out more than 132,000 such loans in 2007, an increase of more than 270 percent from two years earlier.” -Charles Duhigg
Even if you don’t know that much about reverse mortgages, this number is staggering. And these stats were from 10 years ago, that number is significantly higher today. So, the title of this article grabbed you, and that’s good. Understanding reverse mortgage interest rates is in every homeowner’s best interest.
You’ve found this article about reverse mortgage interest rates how? Probably by accident. That’s okay! When we did a search to learn about reverse mortgage interest rates, there’s not a direct answer to the question of what are today’s reverse mortgage interest rates? Let’s get to the bottom of this question and see if we can clear things up and help you out. At any point, you can click here to contact us or to find our number to call us with any questions you may have.
First things first, Cost?
Just like any other type of loan, the cost to you isn’t just what the interest might be. The cost to you entails a few other things. There are a number of different closing costs that you should become aware of before you get going on your reverse mortgage. Here is a list of what costs you might see when you start on your reverse mortgage loan.
- Federal Housing Authority’s (FHA)
- Home Equity Conversion Mortgage (HECM) product
- Mortgage insurance premiums (MIP)
- Origination fees,
- Third party charges
- Servicing fees
Reverse Mortgage Interest Rates
The reverse mortgage Interest Rates are tough to find if you have no idea what you’re doing. We are all blessed because the United States Department of Housing & Urban Development publishes statistics on all HECM origination’s each month. According to their published data, below is their list of the last three-year reverse mortgage interest rates on average. The rates may not be the same as what you may qualify for, but it’ll give you a nice idea of what you may be looking at when it comes to your reverse mortgage interest rates. The left number is the fixed reverse mortgage interest rate, while the right is the adjustable reverse mortgage interest rate.
- 2016-01-01 4.93% 3.54%
- 2016-02-01 4.90% 3.68%
- 2016-03-01 4.94% 3.81%
- 2016-04-01 4.96% 3.93%
- 2016-05-01 4.95% 4.03%
- 2016-06-01 4.94% 4.10%
- 2016-07-01 4.92% 4.16%
- 2016-08-01 4.91% 4.26%
- 2016-09-01 4.92% 4.44%
- 2016-10-01 4.89% 4.54%
- 2016-11-01 4.91% 4.60%
- 2016-12-01 4.89% 4.68%
- 2017-01-01 4.91% 4.72%
- 2017-02-01 4.91% 4.68%
- 2017-03-01 4.95% 4.58%
- 2017-04-01 4.96% 4.50%
- 2017-05-01 4.97% 4.45%
- 2017-06-01 4.99% 4.40%
- 2017-07-01 4.98% 4.42%
- 2017-08-01 4.98% 4.48%
- 2017-09-01 4.98% 4.48%
- 2017-10-01 4.95% 4.49%
- 2017-11-01 4.97% 4.57%
- 2017-12-01 4.95% 4.63%
You should always understand that reverse mortgage interest rates vary based on the program that you choose. Since most of loans are part of the HECM program, the overall interest cost of the HECM will be smaller since the loan is being backed by the Federal Housing Authority.
Fixed Rate and Adjustable Rate
Here’s how the U.S. Department of Housing and Urban Development defines fixed reverse mortgage interest rates. It’s explained way better than we could:
“Some lenders offer HECMs with a fixed interest rate. With a fixed-rate reverse mortgage, the principal limit and the loan balance will grow at the interest rate determined at closing. When discussing a fixed-rate reverse mortgage, the counselor must make the client aware that some lenders may set the interest rate at a level that makes the line of credit with a full, up-front draw at closing the only feasible option drawing the entire loan balance at closing exposes the borrower to many risks, including the lack of future availability of loan proceeds from credit line growth once the full amount is drawn, the borrower will pay interest on that large loan balance for the life of the loan drawing the entire loan balance may create a significant and unnecessary expense if the borrower does not need all the funds at closing, and over time, a fixed-rate loan which avoids the risk associated with an adjustable interest rate may be less advantageous to the borrower than an adjustable-rate loan which may maximize the amount over the life of the loan.
Below you’ll find a list of what the fixed reverse mortgage interest rates are as well as the adjustable reverse interest rates. Again, they might not be the same for you, but it might be so it’s nice to have:
- Year Fixed Interest Rate Adjustable Interest Rate
- 2014 4.99% 2.66%
- 2015 4.94% 3.13%
- 2016 4.92% 4.14%
- 2017 4.96% 4.53%
Reverse mortgage interest rates and You
As always your personal reverse mortgage interest rates will depend on a few things. Such as:
- Whether you are planning on getting a HECM reverse mortgage or a HECM for Purchase
- Your age
- Your home’s value
- Your property zip code
- Any existing mortgage balance or liens
- Number of expected years in the house
- Your life expectancy
- The disbursement option chosen
Everyone’s reverse mortgage interest rates will be different and can be very confusing. Hopefully this blog post has given you a little clarity on the reverse mortgage interest rates numbers. We know you still have questions and we are here to help. We’d love you to contact us to talk and even better, to set up an appointment for you and your family. Reverse mortgages are a good thing and we at Rick May want to show you.