Can I refinance my existing Reverse Mortgage Loan?
Yes. You can always refinance your Reverse Mortgage Loan. This might make sense if interest rates have lowered or if your house has appreciated substantially.
In the past few years, many of our clients have contacted us because their homes have appreciated and they would like to get additional cash out, if possible.
Like any mortgage, you can choose to #refinance your #reverse #mortgage into another type of loan, or even another reverse mortgage.
A reverse mortgage loan is a negative amortization loan, meaning the balance will slowly grow, over time. This means few lenders (if any) will want to be in a 2nd lien position on a home with a reverse mortgage. It is possible, however, to refinance a reverse mortgage into a new loan.
One popular way to do exactly that is with a #HECM to #HECM refinance. This will essentially pay off the first reverse mortgage and give you a new reverse mortgage with a cash advance and/or a line of credit. Plus, the unused portion of your line of credit will grow every year, and for many borrowers, this eliminates the need to refinance later on. HECM to HECM refinance loans are especially popular in #California, where the homes have appreciated substantially in the last few years.
To find out if you would be eligible for a HECM to HECM refinance, grab your current reverse mortgage statement and look at the total balance of the loan. If it equals roughly 1/2 or less than your home’s current value, then there is a good likelihood you will qualify. It also depends on your age, so the older you are, the less equity you need to have.
Keep in mind, if you decide to refinance back into a “forward” mortgage, you will once again have to make monthly payments. If you are on a fixed income and are not used to having to make those payments, you will need to adjust your budget accordingly. Plus, you will have to document enough income to qualify.
Contact your loan officer to discuss your specific situation.