Reverse Mortgage Loan Blog

Time brings change. Nowhere could that be truer than in the world of reverse mortgages. During the past three years, there’’s been a huge increase in the choices and benefits that reverse mortgages provide to borrowers.

Many previously undecided homeowners are making the move and enjoying the benefits of a reverse mortgage. The big change that’’s helping them get started — the FRRM (Fixed Rate Reverse Mortgage)

While there are benefits in obtaining either a fixed or adjustable rate mortgage, for many elderly homeowners, the thought of not knowing what their interest rate will be 5 or 10 years from now presented an obstacle. “I owned a home when interest rates were very high,” said Carolyn Brandon, a retired state employee. Ms. Brandon had investigated reverse mortgages for over a year. “Everything looked great, but I waited until I could get a fixed rate reverse mortgage,” she added.

Although homeowners don”t make payments on a reverse mortgage as long as they live in the home, the adjustable rate can still affect the amount they owe on the property over a longer period of time. A fixed rate enables them to know in advance how much their loan balance will be in the future.

Pros and Cons? Borrowers might receive less money from a fixed rate reverse mortgage, depending on their age. This is because the amount of money a borrower receives from a reverse mortgage is based partly on the interest rate at closing — the lower the rate, the more they receive. Adjustable rate reverse mortgages have a slightly lower rate, meaning that the borrower could receive more money than with a fixed rate. As part of the decision making process, homeowners should look at the difference in the amounts available on both the fixed and adjustable rate reverse mortgages.

Found here.

Bookmark It

Hide Sites