Much is written about how [tag]reverse mortgages[/tag] differ from traditional (“forward”) mortgages. Here’s a subtle difference we’ve noticed but not seen discussed previously:

While traditional mortgage lenders use every opportunity to put mortgage rate information in front of customers’ eyes, a potential reverse mortgage borrower has to do quite a bit of work just to get an idea of the going rate for a reverse mortgage.

Examples:

• a random sampling of five internet ads for [tag]reverse mortgage lenders[/tag] showed that none of them included specific information about current rates on their landing pages;
• a search for the term reverse mortgage interest rates brings up lots of technical info on how rates work, but few specifics like “Today’s Rate Is __%”. Actually, one of the results from this search – a link to [tag]Wells Fargo[/tag], the largest reverse mortgage lender – did look promising: “Visit our Today’s Rates page to view current interest rates for a variety of products.” But clicking through brought us to this page which includes rates for just about everything but reverse mortgages.
• a call to another prominent reverse mortgage lender’s 800-number to ask about current rates met with a promise to have a specialist call back if we cared to leave our name and number;
• the website for the [tag]National Reverse Mortgage Lenders Association[/tag] ([tag]NRMLA[/tag]), has this information, but restricts access to “members only”. Huh? Only the lenders get to know the rates?

Now there are some reasons for all of this.

First, there is no real interest rate competition among lenders. Reverse mortgage rates are tied to indexes and margins that are the same for everyone. Lenders compete on service, reputation, and, to a lesser degree fees, but not interest rates. Using advertising resources or web real estate to tout interest rates that are standardized across the industry probably doesn’t make much sense.

Second, reverse mortgage interest rates can be bewildering and easily misunderstood. Having a knowledgeable person explain these rates to customers is a good idea and is one of the reasons counseling is a mandatory requirement for potential reverse mortgage borrowers.

Third, there are no readily available “apples-to-apples” interest cost comparisons between different programs and options. One reverse mortgage may have a higher nominal rate, but still be the better choice in certain situations. The standard [tag]APR[/tag] that consumers are familiar with in comparing regular loans doesn’t exist for reverse mortgages – at least not without first obtaining a lot personal information (age, home value, etc.) from the customer

Finally, the interest rate in a reverse mortgage transaction simply may not be as important to the borrower as it is with other loan transactions. After all, reverse mortgage borrowers don’t make monthly loan payments to the bank and never have to worry about owing more than the value of their home no matter how rates change. On the other hand, interest rates do help determine how large a reverse mortgage the borrower can qualify for - but this relationship isn’t understood by many people.

Still, we thought there was need for a readily available source for current (and historic) reverse mortgage interest rate info. Accordingly, we are pleased to unveil the following reverse mortgage rate webtool to help meet this need. We’ve tried to make it as easy to use and understand as possible - simply select date ranges to see reverse mortgage rate information for the listed products and time periods.

A permanent link to this tool will be prominently included on the Reverse Mortgage Information website menu. We hope visitors find it useful and, if you have suggestions for making it better, please contact us. In future posts we’ll comment on reverse mortgage interest rate trends and describe some ways this information can be used in your decision-making.

Social tagging: HUD Reverse Mortgage > Reverse Mortgage Rates

A Few More Related Articles of Interest:

Reverse Mortgage Rates - Effective thru 6/19/06

Reverse Mortgage Rates - Effective thru 6/26/06

Reverse Mortgage Rates - Effective thru 7/10/06

Reverse Mortgage Rates - Effective thru 7/17/06

Reverse Mortgage Rates - Effective thru 7/24/06