Similar to conventional home loans, there are two major types of reverse mortgages – those with fixed interest rates and those with adjustable rates. The fixed rate product started in 2007, prior to which all HECM loans were adjustable.
As a general rule of thumb borrowers who take a lump sum payment get a fixed interest rate, while those who choose to receive monthly payments or take a line of credit get the adjustable version. Adjustable rate reverse mortgages have a maximum rate cap and fluctuate monthly or yearly, depending on the terms of the loan.
HUD publishes monthly data on all HECM originations, and prospective borrowers can use this information to gauge market interest rates.