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A guide to reverse mortgage interest rates

Depending on the value of your property, the appraiser associated with the financial institution that you approach for a reverse mortgage loan will quote an eligibility amount in exchange for your home equity. For home owners over the age of 62, with a primary property that can be pledged, a reverse mortgage would increase your incomes after retirement.

Catering to the increasing number of borrowers who prefer reverse mortgage loans, are reliable and safe lenders who provide a range of services. From explaining plenty of reverse mortgage alternatives to explaining in detail about the interest rates and the pros and cons of each option through skilled representatives, these lenders rule the market currently.

While continuing to let them live on their familiar property, reverse mortgages are very favorable to older adults. This type of credit is non-taxable because they are treated as loan advances and not as income earned.

There are no regular payments to be made, and interest is charged only at the end of the loan period. However, reverse mortgage interest rates and fees have to be studied carefully. While interest rates and fees are high for reverse mortgages, these costs are self-financed, so there are no out of pocket expenses.

Bate of interest (ROI) for reverse mortgages can be fixed or variable. Variable interest rates depend on an index – an approved rate that changes based on market interest rates and not controlled by the lender and, margin – the interest percentage added to the index by the lender that remains fixed after the loan period starts.

Also, how often the variable ROI changes depends on the frequency you choose – monthly or yearly. The initial interest rate, expected interest rate, compounding rate (addition of the annual mortgage insurance premium and the current interest rates being charged) and line of credit, are other terms that have to be explored and researched well.

A favorable combination of the older age of the borrower, low mortgage balance, high home equity and low-interest rates help in gaining the most funds for your use from reverse mortgages.