Reverse-Mortgage-Truth.com

Non-FHA Jumbo Reverse Mortgages:
Financial Freedom Cash Account Advantage Reverse Mortgage: 6.66% (Index is 6 month LIBOR at 3.16% plus margin of 3.5%)
Fixed Rate Jumbo Reverse Mortgage: 8.625% (available on home values up to $10,000,000)
LLS Financial EPA Jumbo: 6.65%

FHA Reverse Mortgages:
HECM, which is the FHA Home Equity Conversion Mortgage rate is 3.64% (Index is the 1 Year CMT at 2.14% plus a margin of 1.5%)
The fixed rate HECM is at 6.56% to 6.83% (depending on the bank)

Get a reverse mortgage quote for the details and Total Annual Loan Cost (like APR). These interest rates do not include closing costs.

FHA Reverse Mortgages:
FHA Home Equity Conversion Mortgage (HECM) rate is unchanged this week at: 3.66% (Index is the 1 Year CMT at 2.16% plus a margin of 1.5%)
The FHA Fixed rate HECM Reverse Mortgage: 6.31% to 6.55% (depending on the bank)

Jumbo Reverse Mortgages:
Financial Freedom Cash Account Advantage Reverse Mortgage: 6.66% (Index is 6 month LIBOR at 3.16% plus margin of 3.5%)
Fixed Rate Jumbo Reverse Mortgage: 8.375% (available on home values up to $10,000,000)

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.

Financial Freedom, the reverse mortgage subsidiary of mortgage lending giant Indy Mac Bank, has dramatically increased the interest rate on its fixed rate reverse mortgage.

As many brokers discovered recently when they updated their Reverse Mortgage Analyzer (RMA) software with Financial Freedom, the leading lender has bumped their fixed-rate reverse mortgage interest rates from the mid 5% range up to 6.81% (rate current as of Friday).

Other reverse mortgage banks are still offering the fixed rate reverse mortgage below 6%, though their rates have recently been increasing too.

With all the recent turmoil in the credit markets, it is no wonder that lenders are tightening their belts and increasing the rates that they offer to consumers. As their balance sheets bleed red ink and their stock prices drop, lenders are forced to make up their losses wherever and however that they can. So they have turned to their reverse mortgage programs to find more profit. As such, even the adjustable rate reverse mortgage programs have seen an increase in the margins – the profit margin – to the lender.

A few months ago, a 1% margin added to the treasury bill rate was common for the FHA Home Equity Conversion Mortgage (HECM). Today, a 1.5% margin is standard. This situation is likely to continue, and perhaps even get worse, until banks are able to recover. And that is not likely to happen until the real estate market recovers – a turning point in the future whose timing is anyone’s guess.

Since the inception of the reverse mortgage program by HUD, only an adjustable interest rate has been available – at least until last year. With recent news stories spreading fear about the danger of adjustable rate mortgages, many seniors have understandably been more than a little gun-shy of the reverse mortgage with an adjustable rate.

But just in this last year, a new fixed-rate reverse mortgage has been introduced. The rate is locked at the drawing of the final loan documents and remains fixed for the life of the loan. With rates as low as 5.5% this year, a fixed rate reverse mortgage sounds like an attractive option. But, as with most new things, it comes with a few caveats.

The fixed rate reverse mortgage requires that the senior homeowner take out the money that they qualify for as a lump sum. No credit line, term or tenure income payment is available. For those that have a large mortgage to payoff, or for those who have plans for the money, this disadvantage is the sleeves out of their vest. But for this reverse mortgage for seniors who owe little or nothing on their homes and just want a little additional monthly spending money, the lump sum requirement has some real tradeoffs.

If they are required to take out all of the money at once, then interest will begin accruing on the full loan amount from the first day. But with the adjustable rate reverse mortgage, they could get a monthly income check whose amount is added to the mortgage balance when the check is deposited. This would keep the balance of the reverse mortgage lower over the long run, allowing less interest to accrue and leaving the senior or their heirs more home equity down the road.

The fixed rate reverse mortgage may be a good idea for some seniors. For those who think that an adjustable rate will, over time, average out to be higher than the currently-available fixed rate, it may be a good choice. Those who choose the fixed rate reverse mortgage must also have a good use for the lump sum of cash that they will receive, so that they do not needlessly accrue interest on their loan.