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Reverse Mortgage Rates

 



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Mortgage Rate Reporting Tool
Listed below is a summary analysis of reverse mortgage rates for the products listed. The timeframe used in the below report is from 04/19/2015 to 04/19/2016. If data for a particular product is not available for the entire period requested, the starting and ending dates for which data is available will be noted.

To change that timeframe, use the below form and click the submit button. This page will then reload and display a summary analysis based on the dates you submit.

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Summary Analysis of Reverse Mortgage Rates From 04/19/2015 to 04/19/2016

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ProductReported
Date Range
Starting RateEnding RateAverage RateHighest RateLowest Rate

Reverse Mortgage Rates Explained

Home Equity Conversion Mortgage Initial Rates
(HECM 100, 125, 150, HECM Annual)

The Initial Rate (also called "current rate") is the interest rate charged on your HECM loan balance. (An additional charge of one-half of one percent - 0.50% - is added to this rate for FHA mortgage insurance.)

Once the interest rate adjustment period (monthly or annual) has been selected at closing, it cannot be changed. Initial (Current) Rates for the both annual and monthly HECMs are tied to the one-year U.S. Treasury Security Rate. The initial interest rate for a monthly-adjusting HECM loan is set at the U.S. Treasury Securities rate adjusted to a constant maturity of one year, plus a margin (currently 150 basis points or 1.50%). For the annualy-adjusting HECM, the margin is 310 basis points or 3.10%. Accordingly, there is always a 1.60% spread (3.1%-1.50%) between current rates on the annual and monthly HECMs.

HECM borrowers who select a line of credit (LOC) payment option benefit from compounded growth on the unused portion of their HECM credit line. The rate at which the creditline grows equals the initial (or current) interest rate being charged on the loan plus one-half of one percentage point. (This total rate is then divided by twelve to reflect monthly compounding.)The rate paid on the unused LOC balance is actually the same rate charged on any portion of the loan that has been drawn. This is because a monthly mortgage insurance premium of 0.5% is added to the current interest rate.

A change in the interest rate has no effect on the amount or number of loan advances you receive, but it does cause your loan balance to grow at a faster or slower rate. The higher the interest rate, the faster your loan balance will grow, and vice versa.

Home Equity Conversion Mortgage Expected Rates

The Expected Rate is the constant interest rate used to calculate the size of reverse mortgage loan (principal limit) you can qualify for. Once set, this rate is never charged on the loan; it is used to determine the loan payments to the borrower. (The adjustable interest rate actually charged on the loan balance is the "initial" or "current" rate.)

The expected interest rate is inversely related to the amount of maximum monthly payment or line of credit that is available to the HECM borrower. The lower the Expected Rate, the greater the loan amount and/or available line of credit.

The Expected Rate equals the current U.S. Treasury Securities rate adjusted to a constant maturity of 10 years (also known as the 10-year Treasury rate) plus the "lender's margin." The 10-year Treasury index is used because it represents the financial market's best current estimate of what interest rates are likely to average during the course of the loan. The expected rate is subject to change each Tuesday after the latest Federal Reserve interest rates are released, but the borrower can lock-in the rate for 60 days.

Fannie Mae is the major purchaser of HECM loans and sets the margin at which it will purchase HECMs. At present, the margin for HECMs with annually adjustable interest is 310 basis points or 3.10%. The margin for monthly adjustable HECMs is 150 basis points or 1.50%.

Fannie Mae HomeKeeper Reverse Mortgage Interest Rate

The interest rate on the Home Keeper mortgage is based on both the most current weekly average of the one-month secondary market CD index as published in the Federal Reserve's H-15 Bulletin and a margin determined by Fannie Mae. This margin (currently 3.4%) never changes over the life of the loan and is not tied to the age of the borrower. However, the interest rate on your loan can change monthly as the index on one-month CD's changes.

The initial rate and all subsequent adjustments must be rounded to the nearest 1/8 percent (to three decimal places) up or down.

Home Keeper interest rates cannot increase by more than 12 percent over the life of the loan. This limit on the maximum interest rate increase is known as the rate cap. There is no limit to how much your interest rate may increase per monthly adjustment, as long as the change does not exceed the 12 percent lifetime rate cap. For example, if the original interest rate on your loan was 7 percent, your interest rate could never exceed 19 percent but could, theoretically, jump from 7 percent to 19 percent in a single month.

A change in the interest rate has no effect on the amount or number of loan advances you receive, but it does cause your loan balance to grow at a faster or slower rate. The higher the interest rate, the faster your loan balance will grow, and vice versa.



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