Finding information about the interest rates for reverse mortgages
If you are a senior who is age 62 or older, you might have heard about getting a reverse mortgage in order to supplement your retirement income. When handled correctly, reverse mortgages can be an effective tool to enable seniors to live in greater financial comfort. If you've tried to check around to find information about the interest rates for reverse mortgages, you've likely found that it is difficult to find what you're looking for. Unlike rates for traditional mortgages, rates for reverse mortgages may be hard to uncover. We have gathered some information for you here to make it easier.
Reverse mortgage interest rates: Fixed vs. adjustable
The rates that are available will depend on the lender that you choose and the type of loan that you select. The U.S. Department of Housing and Urban Development publishes a monthly report containing data about all of the reverse mortgages that have been originated in each month, including the interest rates that were charged. The rates vary from lender to lender, but the average interest rate can be gleaned from the data provided by HUD for the months of June through Sept. 2016:
June 2016- fixed 4.94 percent; adjustable 4.10 percent
- July 2016- fixed 4.92 percent; adjustable 4.16 percent
- Aug. 2016- fixed 4.91 percent; adjustable 4.26 percent
- Sept. 2016- fixed 4.92 percent; adjustable 4.44 percent
The rates will vary depending on your chosen lender and program. Your reverse mortgage loan officer at Quontic Bank can provide you with information about the different interest rates and program types.
Adding mortgage insurance premium (MIP) to reverse mortgage interest rates
People are required to keep mortgage insurance on their homes on which they have reverse mortgages. Your up-front mortgage insurance premium (MIP) will be 0.5 percent or 2.5 percent, depending on your disbursements. Over the life of the loan, you will also be charged an annual MIP that equals 1.25 percent of the outstanding mortgage balance. This 1.25 MIP will be charged in addition to your interest rate. In order to fully understand the APR on your loan, you will also need information about the closing and insurance costs.
Interest rates for reverse mortgages and chosen lender types
Home equity conversion mortgage (HECM) is a Federal Housing Administration (FHA) reverse mortgage program. A majority of reverse mortgages are FHA-backed. While there may also be private reverse mortgages available which are not backed by the FHA, they generally carry higher costs. The lender you choose will also affect the rates that are available to you. Also, keep in mind that mortgage brokers may charge fees which are in addition to the fees you may pay if you apply directly to a community bank like Quontic Bank. Whether you choose a fixed-rate reverse mortgage or an adjustable rate reverse mortgage will also have an effect on the rate you pay over time. A reverse mortgage loan officer at Quontic Bank will fully disclose the various interest rates, costs and fees that are associated with the different types of reverse mortgage products. To schedule your consultation or to get a free quote, call Quontic Bank today at 1-800-388-7689.