Reverse Mortgage Interest Rates are a little different from standard Mortgage Interest Rates. The idea is essentially the same but how the reverse mortgage interest rate affects the loan is pretty unique. Understanding these differences can have a big impact on how well your Reverse Mortgage will work for you.

Understanding Interest Rates

Since beginning my Mortgage Career in 2006 I’ve learned much about how the economy works and what drives certain aspects of our economy, for example:

  • Interest rates are an excellent gauge of the strength of the economy. When the economy is strong rates will usually rise. Conversely, low rates usually indicate a struggling economy. (Link 1)
  • Governments like some inflation and purposely manipulate interest rates to drive inflation up and reduce the burden of Government debt. (Link 2)
  • Interest rates have real power. A lower rate is far more important than a lower price when it comes to buying a home, car or anything else. (Link 3)

Use Rates to your Benefit

I’ve seen many people shoot themselves in the foot because they don’t see the true power of interest rates. They procrastinate buying or refinancing their home because prices are high or rising. But by ignoring current low-interest rates they will cost themselves tens of thousands of dollars in the long run.

How Rates affect Reverse Mortgages

Reverse Mortgage interest rates are a key issue for retirees looking to live better. When determining borrowing power for a Reverse Mortgage these three factors are of primary importance:

  1. Home value or purchase price
  2. Age of the youngest borrower
  3. Interest rate

Home value fluctuations are typically pretty minor. They Generally increase or decrease by 2-10% per year. Interest rates on the other hand can fluctuate pretty dramatically from week to week and even day to day. I’ve seen days where interest rates changed as many as 5 times because of market volatility.

Small change = big difference

On a Reverse Mortgage, a difference of .25% in interest rate would cost the homeowner thousands over the years. A slightly higher rate could also reduce borrowing power by as much as $15,000-$20,000 depending on the home value.

Timing is everything

Home values are once again at record highs and Interest rates right now are at all-time lows. However, inflation is becoming a major issue which at some point will cause interest rates to jump. 

If you’re considering a Reverse Mortgage please don’t procrastinate. Your options likely won’t get better than they are right now but they could get dramatically worse when rates rise. Call us today to look at your situation and to answer any questions you have about how a Reverse Mortgage would help you.

Trevor Carlson

President – Reverse Mortgage Specialist

Heritage Reverse Mortgage


Heritage NMLS #1497455 Trevor’s NMLS #: 267962

1060 South Main Street Bldg. A Suite 101B

St George Utah 84770