Fixed Rate Reverse Mortgage
Like traditional mortgages, reverse mortgages come in many different forms. One of the most popular types of reverse mortgage is the fixed rate mortgage, a powerful tool that allows borrowers to lock in a low interest rate for the life of their loan. Keep reading to learn more about the structure and benefits of fixed rate reverse mortgages.
How Does a Fixed Rate Reverse Mortgage Work?
Whereas some reverse mortgages come with variable interest rates that fluctuate with the broader financial markets, a fixed rate option offers the opportunity to secure a long-term loan at a reasonable rate of interest. When you take out a fixed rate reverse mortgage, the interest rate at the beginning of the initial term will be the same at the end of the term.
Fixed rate mortgages return a portion of your home's equity to you in the form of a lump-sum cash payment that you'll be able to use at your discretion provided you have sufficient equity.
Reverse Mortgage Fixed Rate Benefits
In addition to the benefits that attach to other types of reverse mortgages, fixed rate vehicles have some key perks. These include:
Lower interest rates that can save thousands of dollars over the life of a loan
Insulation from market volatility
The freedom to tap a large amount of equity in a lump-sum payment
While the rate that you pay on your fixed rate loan will depend on market conditions at closing time, the actual amount that you'll be able to borrow depends on your age, the appraised value of your home and the prevailing interest rates in your area. If you carry a joint title with your spouse, the youngest age on the title will be the "age of record" for your mortgage, ideally. However, recent changes in FHA regulations may allow a spouse younger than 62 to be on the reverse mortgage but receive less cash.
Federal Housing Administration Mortgage Insurance
The Federal Housing Administration, most commonly known as the FHA, provides insurance to FHA approved lenders. It is the largest Government backed insurer of mortgages in the world since it was founded in 1934.
FHA mortgage insurance provides FHA approved lenders protection from homeowners defaulting on their mortgage loans. The FHA will pay the lender a claim in the event of a homeowner’s default.
Finding San Diego Fixed Rate Reverse Mortgages
Qualifying for a fixed rate reverse mortgage is easy. Successful applicants must meet these requirements:
Aged 62 or older (at least one spouse)
Significant equity in a primary residence
Complete a HUD-approved financial counseling session, which may be done on the phone
A desire for financial flexibility and freedom throughout retirement
Other than the home itself, reverse mortgages don't require borrowers to put up collateral before receiving their loans.
For more information about fixed rate mortgages in California, call us toll-free at 877-700-0942 or explore our site. To obtain a reverse mortgage fixed rate quote and speak with a Certified Reverse Mortgage Professional (CRMP), contact us.