What’s a Reverse Mortgage?   Who’s Eligibile?   Uses of Reverse Mortgage Loans   Top Reverse Mortgage Concerns   Saying No to a Reverse Mortgage   Adult Children Involvement   Loan Approval Process   Annualized Growth Rate   Rates, Margins, Adjustments & Caps   Loan Payout Options   Types of Reverse Mortgages   Comparisons   Loan Closing Costs   FAQ   How Much Can You Borrow?

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 Annualized Growth Rate

An "Annualized Growth Rate" feature is available on many Reverse Mortgage loans. This growth rate is applied to the unused portion of a borrower's line of credit, increasing the credit line balance over time. It's similar to a savings account balance increasing due to interest earned.

EXAMPLE:  A borrower obtains a $170,000 Reverse Mortgage in the form of a line of credit. $20,000 is used at closing to pay closing costs and home repairs, leaving $150,000 balance. Assuming no additional funds are withdrawn from the credit line, at an annualized growth rate of 6.500%, the line of credit balance grows to over $300,000 dollars in 12 years. The annualized growth rate applies to any unused credit line balance and greatly increases a senior homeowner's borrowing power. On HECM loans the annualized growth rate is ½ percent higher than the interest rate charged on the loan.

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