Reverse mortgages are unique home loans marketed to senior citizens, 62 and over, who have built up equity in their homes and need cash for living expenses. Senior homeowners can turn some of their home’s value into cash without having a monthly mortgage payment. When the homeowner dies, the house is sold to pay off the loan to the lender, and any leftover value is divided among the heirs. This reverse mortgage rate controls the total amount of interest due to the lender upon the homeowner’s death.
Traditional mortgage rates or rates tied to payment methods, is when the lender issues the loan to the borrower up-front. This is necessary for the borrower to afford the home in the first place, so payment methods vary and are connected to the interest rate.