The following is an interest rate update on reverse mortgage programs.
FHA Reverse Mortgages (Home Equity Conversion Mortgage or ‘HECM')
The HECM rate is at 4.07%. This is based on the One Year CMT index at 2.57% plus a margin of 1.5%.
The fixed rate HECM is at 6.30% to 6.68% (depending on the bank)
Non-FHA Jumbo Reverse Mortgages:
Financial Freedom Cash Account Advantage Reverse Mortgage: Suspended
Bank of America / Countrywide Jumbo: Suspended
Fixed Rate Jumbo Reverse Mortgage: 8.875%
Variable Rate Jumbo Reverse Mortgage: 6.65%
Of course, interest rates do not include closing costs which vary. A reverse mortgage quote will provide the details like closing costs and the Total Annual Loan Cost.
My blog: http://www.activerain.com/blogs/reversemortgagescalifornia
I have been asked by many older clients, and i didn't know the answer, so let me ask you. What is better to use, a reverse mortgage or a home equity line of credit
Steve,
It depends. If they need only a relatively small fixed amount of money, can qualify for a home equity line of credit (HELOC) for that amount and know that they will be able to make the payments for as long as they are going to live in the home, then a HELOC is the best choice. But they need to understand what happens if they cannot make the payment for some reason.
If they're on a lower fixed income, need a significant/unknown/consistent amount of money, or are not sure they can make the payments forever, then they should get a reverse mortgage. That way, they'll have the complete security of having the cash and no payments for as long as they live in the home without risking their home ownership.
Luke
My blog: http://www.activerain.com/blogs/reversemortgagescalifornia