Ask Terry Questions Reverse Mortgages fixed or variable interest rate?

Reverse Mortgages fixed or variable interest rate?

By Terry Savage on April 27, 2015 |


Dear Terry
I have read your article about Reverse mortgages in the Sunday Sentinel, My question is, in paragraph number 2, you stated that the interest rate is fixed at the time I take out the reverse mortgage. However, when I closed on my reverse mortgage here in Florida July 2012, the loan officer told me that there were no longer any fixed interest rate reverse mortgages, only variable interest. So I took the reverse with a variable interest rate. Was that information given me wrong? How do I find out?

Terry Says:   It may be that in your state at that time, no one was offering a fixed rate Reverse Mortgage.  But there are fixed rates in many states.  I will cut and paste a section that describes the interest rate opportunities at  I encourage those seeking these loans to try to find a lender that will lock in the rate.  But you should be aware that without the protection of variable rates, the lender will give you access to less money from your home equity!  There is a tradeoff!

Here’s that info from

Q: How does the interest work on a reverse mortgage?
A:  With a reverse mortgage, you are charged interest only on the proceeds that you receive. Both fixed and variable interest rates are available. Rates are tied to an index, such as the 1-Yr. Treasury Bill or the London Interbank Offered Rate (LIBOR), plus a margin that typically adds an additional one to three percentage points onto the rate you’re charged. Interest is not paid out of your available loan proceeds, but instead compounds over the life of the loan until repayment occurs.

Recent Questions



a personal
finance question