Both the fixed and the adjustable are great reverse mortgages, but before you jump the gun and pronounce the fixed rate reverse the winner. There are some things to know about the adjustable.
The adjustable rate reverse is the reverse that allows you to take your money in differing ways: A line of credit, or monthly payments (either term or tenure), all cash or a combination of all methods - it is an "open-ended loan".
Here’s some things to consider:
If you need the most amount of money to payoff an existing mortgage. The fixed is a good fit.
If you have a small or no current mortgage and are looking to supplement income, the adjustable is probably the best fit.
There is also a newer, lower cost HECM SAVER loan that has a lower FHA Upfront Premium. That is a wonderful fit for older homeowners who may not be living in the home for the next 20 years. The loan amounts are less (hence the reduced premium) but it works great and why borrow more than you need if it just means extra fees?
None of the HECM Reverse Mortgages have prepayment penalties, so seniors have the option to make payments on the loan should they wish to keep the balance lower.
A good ethical reverse mortgage consultant can help you to decide which is best for you. Fixed or Adjustable.
By Deborah Nance
Your Local Southern California Reverse Mortgage Professional
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iReverse Home Loans, LLC, NMLS#810502 originates reverse mortgages in Alabama, Alaska, Arizona (MB-0919584), California, Colorado, Connecticut, Florida, Illinois, Indiana, Iowa, Kansas, Louisiana, Maryland, Massachusetts, Minnesota, Mississippi, Missouri, Nevada, New Jersey, New Mexico, Ohio, Oregon (ML-5378), Pennsylvania, South Dakota, Tennessee, Texas, Utah, Vermont (1164-MB), Virginia, Washington and Wisconsin.
Important Information: Reverse Mortgages are neither "endorsed" nor "approved" by the Federal Government. The FHA (Federal Housing Administration) provides certain insurance benefits for lenders and borrowers in connection with the lender’s HECM loans; the FHA does not make or originate loans. The owner(s) retain title to the property that is the subject of the reverse mortgage until the person sells or transfers the property and is therefore responsible for paying property taxes, insurance, maintenance and related taxes. Failing to pay these amounts or failure to maintain the condition of your property may cause the reverse mortgage loan to become due immediately. A reverse mortgage is a complex loan secured by your home. Whether such mortgage makes sense for you depends on your financial situation and needs. For these reasons, we strongly recommend that you consult with a qualified independent housing counselor, family members and other trusted advisers before making this decision. This website is not from HUD or FHA and was not approved by HUD or any government agency.