Choosing a Reverse Mortgage: is a fixed-rate HECM right for you?

A reverse mortgage is a type of loan that allows homeowners age 62 and over to convert their home equity into cash. And unlike other types of home equity-based loans, monthly mortgage payments are not required.* Most reverse mortgages have adjustable interest rates that vary according to market conditions. But many consumers don’t realize that fixed-rate reverse mortgages are also available.With a fixed-rate reverse mortgage, you lock in an interest rate for the entire life of the loan – so you don’t have to worry that it may increase. This option may be preferable to borrowers who wish to receive their reverse mortgage loan proceeds in a lump sum, and want the certainty of a stable interest rate.Burl D. Greaves, a reverse mortgage consultant with MetLife Bank, suggests that consumers consider a few important questions when choosing a reverse mortgage. “It’s important to ask yourself not only, ‘Do I need a reverse mortgage?’ but also ‘What are my particular needs, and which type of reverse mortgage best meets those needs?’”Explains Greaves, “A fixed-rate reverse mortgage may be suited, for example, to older homeowners who would be more comfortable knowing that their interest rate will not change, and who also want to receive their proceeds as a lump sum, so they can immediately use the money to pay off any existing debts, make needed home improvements, or adapt their home to their current needs.”With all reverse mortgages, the borrowers continue to own their home, and can continue to live in it as long as they want. The loan doesn’t have to be repaid until they permanently leave or sell the home. However, they are still responsible for paying

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