Reverse Mortgage Adjustable Rates - The Bills.com Blog
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Reverse Mortgage Adjustable Rates
Friday, Jun 8, 2007
Question: Do all reverse mortgage products currently available to consumers have adjustable rates?
Answer: You are absolutely correct; all reverse mortgage products currently available to consumers have adjustable rates.
The reasons for this are somewhat complicated and mostly have to do with the secondary mortgage market and FHA and HUD rules. In the simplest terms, however, banks don't know how long the customer will have the loan (the term is based on when the borrower either vacates the property or passes away), so they don't have a fixed period for calculating their expected return. The interest rate is indexed to the One-year U.S.
Treasury
Securities plus a margin of one-and-one-half per cent (1.50%).
Lender origination fees are fixed by the FHA at 2% of the lending limit.
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