Lower Interest Rates Mean More Reverse Mortgage Proceeds

As 2018 comes to a close, reverse mortgage borrowers are getting a pleasant surprise – lower interest rates.

With normal conventional “forward” type mortgages, lower rates mean lower monthly payments, which means increased borrowing power.

With reverse mortgages, lower rates obviously have ZERO impact on monthly payments (because there are none), but it does mean increased borrowing power.  Simply said, lower rates mean reverse mortgage borrowers can borrow more of their homes equity. 

Let’s look a little deeper at the importance of decreasing rates and the impact it has on reverse mortgage borrowers.

The FHA calculation for determining how much a reverse mortgage borrower qualifies for is tied to the age of the youngest borrower and the current interest rate.

The older the borrower is, the more they qualify for.

The lower the rate is, the more they qualify for. 

New interest rates (referred to as the “expected rate”), are issued every Tuesday.  

When a borrower completes a reverse mortgage application and is assigned an FHA case number, the interest rate is locked in for 120 days.  At settlement, the lender will compare the expected rate at application, to the expected rate at closing.  Whichever rate is LOWER (and in turn yields the borrower the most money), is the rate that’s used.

So to keep it short and sweet and without going into too much detail (too late Eric)…..

Lower rates = more reverse mortgage proceeds.

For borrowers looking to maximize their proceeds, this is VERY good news. 

For borrowers needing more equity to payoff an existing loan, this is VERY good news.

For borrowers using the HECM for Purchase program to buy a new home, this is VERY good news.

Lower reverse mortgage rates mean borrowers get more money

If you’ve considered a reverse mortgage recently, but either didn’t qualify and/or weren’t happy with the proceeds available, you’re in luck.  

Curious to know how much you now can draw??

Click here to visit our calculator page.

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