How Does a Line of Credit Grow?

Line of Credit Growth

Getting older isn’t something most people like. However, with a reverse mortgage line of credit, the money available in your credit line grows as you grow older.

To figure out your borrowing potential, we use your interest rate plus your mortgage insurance premium (MIP). This is considered your "growth rate". The unused line of credit grows at the growth rate, which is the same rate that is applied to your outstanding balance. Your growth rate predicts how much money you will have available in the future. Remember, this is a line of credit, so the rate can change. There are three components to determine the growth rate: 1) the current index value 2) the margin and 3) since this line of credit product is insured, it also includes a .50% annual MIP which is paid to FHA.

Index 3.100%
Margin 2.000%
MIP .500%
Growth Rate 5.600%