- Use a fixed rate reverse mortgage if you need a large amount of money upfront
- Use an adjustable rate mortgage to receive funds as line of credit, as monthly payments, as a lump sum, or any combination of the three.
Decide between a fixed rate or adjustable rate reverse mortgage
Reverse mortgages can offer someone a steady income and security during their retirement years. However, once you have decided a reverse mortgage may be right for you, you still face another choice – whether to borrow at a fixed or variable interest rate.
While a fixed rate reverse mortgage offers the benefit of a fixed interest rate over the life of the loan, it forces the borrower to take their loan as an up-front lump sum. If you do not need the money on day one, this may cause you to pay unnecessary interest and erode the equity in your home much more quickly than necessary. But if you do need a significant sum now – perhaps to pay off your mortgage or meet an unexpected large bill – the stability of a fixed rate reverse mortgage is worth considering.
For homeowners who do not need money immediately, an adjustable rate mortgage offers homeowners more options for receipt of their funds. Homeowners can choose to receive the money not only via a lump sum, but also via monthly checks for a fixed period or for life, a line of credit, or any combination of the three. These options help the borrower only to borrow funds when they need them; interest accrues only on funds received.
| Fixed Rate Mortgage | Adjustable Rate Mortgage | |
|---|---|---|
| Consistent interest rate for the life of the loan | Y | |
| Interest rates adjust monthly or annually | Y | |
| Receive funds as a lump sum | Y | Y |
| Receive funds as a fixed monthly payment | Y | |
| Receive funds from a line of credit account | Y |
Loading more commentsSince you don't have facebook, please provide us with your location and a valid email address so we can answer it. Without a valid email address,we can't reply. (Go back to login with Facebook)
Due to the high volume of comments received, we cannot publish and/or respond to every comment received. If you have a specific question, we recommend you search our site for an answer before commenting.
* Bills.com will not share, sell, lend, or make public your e-mail address. We reserve the right to delete any questions or comments that violate the Bills.com terms of service.
We get a lot of comments! Before commenting, we ask you to do 2 things:
Log in
Like us
Submit your comment!
Due to the high volume of comments received, we cannot publish and/or respond to every comment received. If you have a specific question, we recommend you search our site for an answer before commenting.
* Bills.com will not share, sell, lend, or make public your e-mail address. We reserve the right to delete any questions or comments that violate the Bills.com terms of service.
Thank you for your comment. Your comment will be posted shortly.
No Comments