*Applicable Mortgage Insurance and TALC (Total Annual Loan Costs) are not reflected.

"Why are interest rates important when choosing the best reverse mortgage?"

1.) The lower the expected interest rate, the maximum amount of proceeds are made available to the homeowner. (Principle Lending Limit)

2.) The better the index performs over time can relate to thousands of dollars of retained equity throughout the life of your reverse mortgage, meaning more inheritance for your children / heirs.

"Why are your advertised rates much lower than my Bank or Credit Union?"

All Reverse Mortgage Company has correspondent approval to offer a wide variety of government insured reverse mortgages. Our margins come from forward commitments secured by large banks, and these benefits are passed down to you. If you would like an amortization schedule that projects how much interest you owe year by year please call.

Choosing Fixed Rate vs Adjustable Rate Reverse Mortgages:

"Seniors and Adjustable Rates" sometimes go together like oil and water but when it comes to the reverse mortgage don't let adjustable rates scare you off that quickly! Remember that changes in your interest rate do not effect your monthly living because there is no payment required on your reverse mortgage.

Today's HECM's (Home Equity Conversion Mortgage) are tied to some of the lowest margins in the history of the program and making the right decision can save you thousands of dollars in retained equity throughout the life of your reverse mortgage. Remember that no matter what rates do in the future what is guaranteed to be fixed are these incredibly low margins and payment options.

The fixed rate reverse mortgage requires that you make a full draw at closing. This means that you begin accruing interest on the full amount of the loan from the very first day. Because of the other options the adjustable rate mortgages allow which include the line of credit, the monthly payments and a combination of monthly payments and line of credit, where the borrower receives the funds as they need them, interest is not accrued until you actually receive the money.

This way, you are only taking money as you need it so you are not eating into your equity as fast as you would if you took all the money out in the beginning. We invite you to speak to one of our knowledgeable reverse mortgage specialists to help find the right reverse mortgage program for you.

About Libor Index

LIBOR stands for "London Inter-Bank Offered Rate."  It is based on rates that contributor banks in London offer each other for inter-bank deposits.  From a bank's perspective, deposits are simply funds that are loaned to them.  So in effect, a LIBOR is a rate at which a fellow London bank can borrow money from other banks. Many types of reverse mortgage loans are indexed to the London Interbank Offering Rate. This index is used to set rates of a variety of different types of loans with adjustable interest rates.

In October of 2007, the U.S. Federal Housing Administration (FHA) ruled in favor of insuring ARM loans based on the one-year LIBOR index. At the same time, HUD also ruled to allow the one-month LIBOR to be used for the purpose of calculating adjustments to interest rates for monthly adjusting Home Equity Conversion Mortgage (HECM). Below is a chart of LIBOR rates for the last 10 years.  LIBOR loans normally have lower margin rates than CMT (constant maturity of U.S. treasuries)

About Treasury Index (Suspended)

Many types of reverse mortgage loans are indexed to the Treasury. This index is an average yield on United States Treasury securities adjusted to a constant maturity of 1 year, as made available by the Federal Reserve Board.  Yields are interpolated by the United States Treasury from the daily yield curve. This curve, which relates the yield on a security to its time to maturity, is based on the closing market bid yields on actively traded Treasury securities in the over-the-counter market.

More Posts on Reverse Mortgage Rates...

• Reverse Mortgage Rates, Treasuries come to an end.
• Reverse Mortgage Rates... Margins Rise Again
• Low Rates for Fixed Rate Reverse Mortgages
• Reverse Mortgage Rates... Index + Margin = Your Money