Reverse Mortgage Rates for 2018
Good Day Reverse is giving you a sneak peek at our reverse mortgage rates! We have also created a list of 12 informative tips you must know when selecting a reverse mortgage interest rate and program. If at anytime you would like to request one of our special offer reverse mortgage quotes you can easily do so by clicking request a special offer quote, or by calling us directly at toll-free: 877-676-6542. Every special offer quote includes various reverse mortgage rates and programs highlighted below, so you can see just how the reverse mortgage can work for you. Our goal is to shed some light on the reverse mortgage rates, so that you can choose the reverse mortgage program that works best for you!
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1) What Are The Different Reverse Mortgage Rates?
It is easiest to think of reverse mortgage rates as being in two separate categories. Fixed rate programs and adjustable rate programs. While both programs are great, they function in very different ways. The best thing to do is to understand both the reverse mortgage rates and programs and know what your goals are for obtaining a reverse mortgage. Also, your current mortgage balance can have a big impact on the different program benefits that might help you choose one over the other. Read on and get a crash course in reverse mortgage rates and programs. Hopefully you will find the information very informative and helpful.
2) The Fixed Rate Reverse Mortgage
The fixed rate reverse mortgage remains fixed for life. This means whichever fixed rate you select will not change for the life of the loan. Easy enough, right? While the fixed interest rate programs are great for many homeowners they do have some distinct differences in how the program works other than just the rates. The fixed rate reverse mortgage is a “closed-end” loan. This means whatever money is available to you through the program at closing will be distributed to you as a lump sum. There is no line-of-credit feature. If you had $150,000 available to you then you would receive a lump sum at closing for all $150,000. While this may be perfect for many homeowners, others may find themselves not needing all of that money at once. Good Day Reverse offers discounts and credits on all of our fixed rate programs. These discounts on the reverse mortgage costs and fees will not only save you thousands on fees, but also qualify you to receive thousands more!
3) What Are The Different Fixed Rates?
There are a few different fixed rate reverse mortgage programs that we offer. The lowest being 4.18% (APR 5.17%) and the highest being 4.99% (APR 5.60%). They vary in terms of not only the rate, but also the discounts and credits associated with each.
4) The Adjustable Rate Reverse Mortgage
The adjustable rate HECM reverse mortgage programs are also a great option! The adjustable rates are the majority of reverse mortgages that homeowners have across the nation. They have been around the longest and offer the most flexibility not only in the amount of rate options, but also how you can utilize the money you are receiving from the reverse mortgage. The adjustable programs have two rate components that we will discuss further. The first component is the index rate, which for all reverse mortgages is the LIBOR rate. The second component is the margin, which is how the adjustable programs are known. The margin and the index LIBOR rate are added together to figure each homeowners interest rate. In addition, there are two LIBOR rates that you can select from. The two rates to choose from are the annual LIBOR rate and the monthly LIBOR rate.
5) Choosing An Adjustable Rate: Monthly vs. Annual
When choosing an adjustable rate program you can select between two LIBOR index rates. The two options are the annual LIBOR or the monthly LIBOR. How do they differ? The monthly LIBOR rates adjust once a month, so you will have 12 adjustments per year. There is no annual cap on the monthly LIBOR, so it will increase to the current rate each month regardless of increase. However, there is a lifetime cap of 10% over the starting interest rate on all monthly LIBOR programs. On the other hand the annual LIBOR rates adjust once a year, so there will be no adjustments during that 12 months. Also, there is a annual cap on the annual LIBOR programs of 2% each year. This means if the annual LIBOR rate increased more than 2% in the 12 months then when the rate adjusts it will be capped at a 2% increase. In addition to this added protection the annual LIBOR programs have a lifetime cap of 5% unlike the monthly rates cap of 10%.
6) What Is An Adjustable Rate Margin?
The adjustable rates are usually identified by the margin that is associated. What is a margin and how does it function? The margin is a rate that remains fixed for the life of the loan and will never readjust. Our current margins are between 1.00% and 1.50%. These fixed rate margins are added to current LIBOR index rates to configure the current interest rate that will be associated with your reverse mortgage loan. The margins not only have a difference in the interest being applied, but also the credit line growth rate. The higher the margin the more interest will be applied, but also the more money that will be added to the line of credit each month. Or, the higher the margin the more money a borrower can receive as a monthly payment. Again, we come back to our original point that when selecting a margin it all comes back to what your goals are in your reverse mortgage loan. There is no margin that is better than another, but instead there is a margin that is better for your goals than another. We offer discounts and credits on all of our adjustable rate programs. These discounts and credit will not only save you thousands on fees, but also qualify you to receive thousands more!
7) Options For Receiving Your Money In The Adjustable Rate Programs
Unlike the fixed rate programs these are considered to be “open-end,” so that you do not have to take all the money available as a lump sum. You have (3) options on how to take your money with the adjustable rate programs. The first option allows you to receive a monthly payment every month that would be wired into your bank account. You can setup your monthly payment, so that it only lasts for a defined amount of months or years, or you can setup to receive the payment for the rest of your life! As long as you live in the property you can receive the pre-defined monthly payment. The second option allows you to utilize the line of credit feature. This is a great feature, because you only need to take the money needed and leave the rest in the line of credit. The money left in the line of credit is not charged interest, or any monthly fees. In addition, there is a “growth rate” which increases the available money in your line of credit every month. You will have more available money next month as you do this month, which is a very good feature. The last option is the previously discussed lump sum payment. Homeowners still have the ability to take all the money as a lump sum in an adjustable rate program too. Are you ready for the best part? You can choose to do any one of these, or all 3! It is completely up to you how you want to setup your reverse mortgage.
8) The Advantage of the Credit Line Growth Rate
We have now mentioned the credit line growth rate a few times, but what exactly is it and how can it help? When selecting from the adjustable rates, each of those programs have a designated credit line growth rate. This growth rate works as a benefit to increase your line of credit every month. Example: In the event that you have a line of credit available for $150,000 and your growth rate selected is 6% then you would see that much more money available every month in your line of credit. In this scenario you would see an additional $750 in your line of credit the next month and it would go up exponentially. The growth rate also works in unison with the monthly payment option. The higher the growth rate the more money you will qualify to receive each month. This is not money being made like you might see on an interest bearing savings account, but instead a great feature that allows you to have more money available to you each and every month.
9) LIBOR Rate Explained
The LIBOR rates are a popular rate that banks use to lend money from one another. It has also become a popular rate for lending programs to use like the reverse mortgage. LIBOR stands for London Interbank Offered Rate. The actual rates are an average of estimated rates that leading banks would use to lend money. It is not only a benchmark rate between banks, but it is the benchmark for reverse mortgage rates. All adjustable rates are based on the monthly LIBOR and annual LIBOR.
10) Compare: Fixed vs. Adjustable Rates
We have already discussed the differences within the fixed rate and adjustable rate programs. Now let’s talk about the differences when comparing each. The fixed reverse mortgage rates are pretty simple in their makeup. The actual interest rate remains fixed for life and there is only one way to receive your money, which is as a lump sum. A popular scenario for homeowners who select the fixed rate is if they have a current loan balance that is relatively high for the reverse mortgage program. In this scenario a homeowner would not be receiving back as much money, since we need to pay off the current loan balance, so a lump sum is perfect.
The adjustable reverse mortgage rates offer more features than the fixed rate. You not only may receive money as a lump sum payment, but you can also utilize a line of credit and/or a monthly payment. With the addition of the growth rate you can have your available money work for you by growing every month. The margins associated with the adjustable rates are fixed for life like the fixed rate program, but the index rate will adjust either monthly or annually.
11) How Can These Rates Affect Your Available Money In The Reverse Mortgage?
The last reverse mortgage rate to discuss, which can affect how much money you qualify for is the expected rate. This rate has nothing to do with your interest rate that will accrue interest on your loan that we have been discussing. The sole purpose of the expected rate is to factor how much money you can qualify to receive with each of the reverse mortgage rates. For the adjustable rate programs the expected rate is figured by adding the 10-year LIBOR Swap Rate with the selected margin. For the fixed rate programs the actual fixed interest rate is also used as the expected rate. As long as the expected rate is below the lending floor of 3.06% then the borrower will receive the max available. If the expected rate for a given program is over 3.06% then the borrower will see their available funds drop. The expected rate can be locked on the day the application is signed to protect the borrowers money in the event the expected rate increases during the loan process. This protects the available money from dropping due to rate changes for 180 days after the application is signed and dated.
12) Why Is It So Important To Choose The Right Reverse Mortgage Rate And Program?
As we have discussed the different reverse mortgage rates and programs offer very different advantages. We feel that it is very important to inform you about all the differences, so you can select which interest rate program works best for you. If you are, a homeowner that is most concerned about the loan balance then our lower rates and margins may be most suitable. If you are, a homeowner who is looking to max out on the available money that can be received with a reverse mortgage then the higher margins and rates might be more suitable. If you are, a homeowner that is looking for something in-between then we can show you those options as well. Hopefully the information that we have highlighted in this list has informed you a little more about all of the options you have with Good Day Reverse.
BONUS: Good Day Reverse Allows You To Choose Your Reverse Mortgage Interest Rate
Good Day Reverse feels it is important for the homeowner to choose their reverse mortgage interest rate and program on multiple levels. Every situation is different and every homeowner has different goals for what they need in a reverse mortgage. Whether it is an adjustable rate or a fixed rate the reverse mortgage offers advantages that no other loan product offers. Rather than a company selling you a particular rate Good Day Reverse prefers to disclose different programs, so you can choose what works best for you. There is also a jumbo reverse mortgage available for homeowners in higher value areas. We also offer discounts and credits on all of our reverse mortgage programs, so that you save on the fees and qualify for more money. Our goal is to be open and honest when discussing the different rates and programs and offer you the best reverse mortgage. Why get LESS when you can get MORE with Good Day Reverse!
Click here to request a special offer reverse mortgage quote, or call us anytime at Toll-Free: 877-676-6542 and speak with one of our reverse mortgage advisors.