Reverse Mortgage Rates
At Crestico, we’re more than just a mortgage brokerage—we’re your trusted advisor in finding the most favorable reverse mortgage rates that align with your financial goals.
Step 1
Check Eligibility
Step 2
Payment Option
Step 3
Get Approved
Step 4
Close the Loan
Step 5
Repayment & Loan Terms
Crestico does not post rates on our website because they change frequently and are determined by the specifics of each individual loan scenario. Reverse mortgages are not a one-size-fits-all product, and the rate you are offered will depend on various factors such as your age, the value of your home, the type of reverse mortgage you choose, and current market conditions. As a result, rates are customized to ensure that they best fit your unique situation and financial goals.
Interest rates in the reverse mortgage industry operate differently from those in traditional forward mortgages. These differences can have a significant impact on the structure and terms of the loan. For example, reverse mortgages are typically offered with either fixed or adjustable rates, and the way interest is accrued and paid differs from conventional loans. It’s important to understand these unique aspects, as they can affect your overall loan balance and the equity in your home. Below, we’ll explain how reverse mortgage rates are determined and how they differ from those of standard mortgages.
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Starting Interest Rate
The initial interest rate is the annual rate at which the money you borrow will accumulate interest, compounded on a monthly basis. For a fixed-rate loan, this rate remains the same throughout the life of the loan. In contrast, an adjustable-rate loan will change monthly based on the one-year treasury index plus the lender's margin.
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Projected Interest Rate
It’s important to note that there is another interest rate, known as the expected rate, which influences the loan amount. The expected rate represents the anticipated average interest rate over the life of the loan, based on historical data. As the expected rate increases, your loan amount decreases, and vice versa. This rate is tied to 10-year treasury rates and is updated every Tuesday until you apply for the loan, meaning your proposal is valid only until the next expected rate adjustment. Once you submit your application, your expected rate is locked for four months, securing your loan-to-value ratio. Fixed-rate loans do not have an expected rate lock.
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Adjustable vs. Fixed
A key difference between reverse and forward mortgages is that most reverse mortgages have a variable interest rate. Similar to Home Equity Lines of Credit (HELOCs), when you borrow money over time, a variable interest rate is applied. True lump sum reverse mortgages are rare, so fixed-rate loans are uncommon, especially with Home Equity Conversion Mortgages (HECMs), where less than five percent of loans are fixed rate.
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Index and Margin
Adjustable interest rates are made up of two components: the index and the margin. The index used is the one-year treasury index, which can be accessed through the link below. To calculate the interest rate, you add the lender’s margin to the index. For example, if the margin is 2%, you would add that to the one-year treasury index to determine the interest rate for that month.
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Interest Rate Limit
The interest rate has a lifetime cap of 5% above the initial rate, meaning this is the maximum it can increase. It moves in line with the initial rate until closing, and the cap is determined by the rate at closing, set five percentage points higher.
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Credit Line Growth Rate
If you have remaining funds in a line of credit, they will grow at the specified annual rate, which is a combination of the initial interest rate and the MIP rate, compounded monthly. The growth rate of the line of credit will adjust each month based on changes in the interest rate.
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FHA HECM vs. Jumbo Private Rate
The FHA HECM product offers a lower interest rate because the government helps protect the lender in case of future losses through the mortgage insurance it collects. In contrast, with jumbo private loans, there is no government involvement, meaning the lender or investor must handle their own mortgage insurance (or self-insure), which results in a higher interest rate. While both loan types are non-recourse, the absence of government backing in jumbo private loans increases the risk for lenders, leading to higher rates.
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No Locking of Interest Rates
Unlike forward mortgages with fixed rate locks for 15, 30, or 45 days, reverse mortgages do not have these types of rate locks during the loan process. The cost of such locks would be prohibitively expensive, so they are not typically used. Both adjustable and fixed rates in reverse mortgages are not locked in until the loan is ready for closing. The only rate that is locked during the process is the expected interest rate, which secures the loan-to-value ratio for four months for adjustable rate HECMs. Fixed rate HECMs may change with market conditions as the loan is processed.