Reverse Mortgage Rates
Fixed rate reverse mortgage
The fixed rate programs are specific to each lender and are not indexed to published interest rates. To determine the currently available fixed rate, a reverse mortgage lender must prepare a good faith estimate.
Adjustable rate reverse mortgage
Adjustable reverse mortgages have interest rates that increase or decrease as a market interest rate index changes. The index used today is the LIBOR.
LIBOR stands for “London Inter-Bank Offered Rate”. The LIBOR is a popular alternative to the Treasury Rate (CMT) for lenders because it is an international index rate instead of being a US-focused index.
Interest rate calculation
The total interest rate is calculated by adding the interest rate index plus a margin set by the lender. For example, a HECM CMT 300 refers to the reverse mortgage program that is using the CMT index and a margin of 3.00%. If the CMT index is 2.10% then the total rate is 2.10% plus the 3.00% margin which equals an interest rate of 5.10%.