Reverse-Mortgage-Truth.com

FHA Reverse Mortgages:
The FHA Home Equity Conversion Mortgage (HECM) rate is the same as last week at 3.57% (Index is the 1 Year CMT at 2.07% plus a margin of 1.5%)
The FHA Fixed rate HECM Reverse Mortgage: 6.31% to 6.45% (depending on the bank)

Jumbo Reverse Mortgages:
Financial Freedom Cash Account Advantage Reverse Mortgage: 6.64% (Index is 6 month LIBOR at 3.14% plus margin of 3.5%)
Suspended: Bank of America Independence Plan Reverse Mortgage

Interest rates do not account for closing costs and are not APR’s. Feel free to contact us or your lender for a reverse mortgage quote.

Jumbo Reverse Mortgages:
Financial Freedom Cash Account Advantage Reverse Mortgage: 6.39% (Index is 6 month LIBOR at 2.89% plus margin of 3.5%)
Bank of America Independence Plan Reverse Mortgage: Suspended

FHA Reverse Mortgages:
FHA Home Equity Conversion Mortgage (HECM) rate: 3.57% (Index is the 1 Year CMT at 2.07% plus a margin of 1.5%)
FHA Fixed rate HECM Reverse Mortgage: 6.06% to 6.40% (depending on the bank)

Interest rates do not account for closing costs and are not APR’s. Contact a lender for a reverse mortgage quote.

This is the final post in a series.

Most of the time costs associated with the option ARM are greater than those for a reverse mortgage. The closing costs tend to be similar amounts, but the interest rates on option ARMs average about 1% higher. Far more costly is the fact that you must cash out all the money at once from an option ARM rather than being able to take it out of a line of credit on an as-needed basis. The line of credit allows the loan interest to accrue more slowly since you keep the mortgage balance lower for a longer period of time, so that the loan interest accrues against a smaller balance. The option ARM only partially offsets this factor in that the homeowner pays a portion of the interest each month.

Common wisdom would indicate that seniors should look before they leap into an option ARM. It is really designed for working people who are willing to trade some of their equity for the privilege of freeing up some monthly cash flow for a period of time. But reverse mortgages for seniors are a far better choice in most cases.

In comparing these two loan products, there are several factors to consider. For some, the option Arm would be like a ticking time bomb – it is only a matter of time before the low monthly mortgage payment would be replaced by a large monthly payment. If the senior does not have an abundance of income and wants to stay in their home for many years to come, then the option ARM would be a poor choice. On the other hand, the reverse mortgage carries the guarantee of no mortgage payments for as long as the homeowner lives in the home.

Qualifying for the reverse mortgage is much easier than qualifying for the option ARM. The reverse mortgage does not require any income, assets (other than home equity) or minimum credit score. The option ARM does require those items, even if they only must be “stated” on the forms by the borrower. Caution: never consider lying about the amount of income or assets. Despite what an eager broker might say, such an action carries potential loan-fraud consequences.

Coming up, Part 5