As a specialist in reverse mortgages you might imagine I spend a great deal of time explaining the basic workings of the reverse mortgage to potential clients. As a whole the general public is still in the dark.

Conversation eventually makes its way to the mortgage options for them and more particularly the interest rate. The truth is that the ARM makes sense for most seniors.

This always makes me smile a bit because when I spring it on the prospective customer, I know they will have a bit of a conniption until I have a chance to fully explain why. Then they reach acceptance.

The reality is the fixed rate option is does not offer the flexibility of the ARM. Only the adjustable rate offers the borrower a line of credit option. The fixed rate, rather, forces the senior to take out money one time and one time only.

The senior gets a two for one deal with the adjustable. First: the senior chooses when to use the money; Second: Interest accumulates only against money’s drawn out, leaving the remainder as a non factor.

This being so, the one borrower for whom it makes sense to go with a fixed rate reverse mortgage is the the one in need a sizable upfront sum of money.

Perhaps the best candidate for the fixed option is the senior in need of paying off a large mortgage. Many times the borrower qualifies for very close to that which it takes to pay off the mortgage. Very little is left in the line of credit. The senior accomplishes a financial task and takes the conservative bet with the fixed rate.

Although the ARM product is currently approaching an all time low, its 15 year average is just below the current fixed rate. This comes down to personalities. In my example the more conservative individual may lien toward the fixed rate mortgage.