Reverse mortgage interest rates can vary by lender and whether you select a fixed or variable product. The variable interest rate is composed of two parts: an index and a lender margin (both are stated in the mortgage contract). Fairway uses the weekly average of the Constant Maturity Treasury (CMT) as the index. To find out what the current reverse mortgage interest rates are, please reach out to Fairway retirement mortgage specialist.

To qualify for a Home Equity Conversion Mortgage (HECM), you must:

• Be 62 or older
• Own your own home (must be an eligible property type) and reside in it as your primary residence
• Own the home outright or have significant equity in the home
• Meet minimal income and credit requirements
• Attend a financial counseling session

The pros of a Home Equity Conversion Mortgage (HECM):

• You can convert a portion of your home’s equity into cash, fixed monthly advances, or a growing line of credit (growth applies to the unused funds).
• You are not obligated to make a monthly mortgage payment — although you can — for as long as you meet the loan terms. Those terms include living in the home as your primary residence and paying the property-related taxes, insurance, and upkeep expenses.

The cons of a HECM:

• The unpaid reverse mortgage loan balance grows over time. This is because interest and fees get tacked on the unpaid loan balance. Note: You do have the option to pay down the loan balance at any time — you can pay as much or as little toward it as you would like.
• You are drawing down on your home equity. Naturally, that likely means your heirs would have less money (or no money at all) coming to them from that particular asset.

For more, visit our blog article The Pros and Cons of HECMs.

No. A Home Equity Conversion Mortgage (or HECM, commonly called a reverse mortgage) must be in the first lien position. The good news is the loan proceeds can be used at closing to pay off (refinance) an existing first or second mortgage as long as the lien(s) meets the seasoning guidelines (liens that have been in place longer than 12 months or resulted in less than $500 cash to the borrower. An exception now exists for some HELOCs).

When a maturity event occurs (e.g., the home is no longer the primary residence of the at least one borrower or a non-borrowing spouse), the loan becomes due and payable, and the home is typically sold to repay any outstanding loan balance. Because reverse mortgages are non-recourse loans, the sale of the home after loan maturity will always satisfy the loan repayment obligation — neither the borrower nor their heirs will be personally liable for any balance deficiency.