Refinancing a Reverse Mortgage Can Benefit Borrowers in Many Ways
If you have a reverse mortgage, you may not realize it can be refinanced. Many of my past customers are surprised to learn they can refinance their reverse mortgage and not only get more money because either their home increased in value or they did their reverse mortgage back with the maximum claim amount was lower. But there are other benefits such as the monthly servicing fee is no longer charged on current HECM reverse mortgages which can be a savings of up to $35 monthly. A big benefit is the new HECM program with a reduced interest rate cap. The old HECM’s had rate caps of 10 points above the start rate and some borrowers started their loan when rates were in the 6% range making the rate cap at 16%!! Now rates are hovering around 3% and the cap has been reduced to 5 points above the start rate, so refinancing would set your loan rate cap at 8 percent.
Another benefit of refinancing are for those with younger spouses who were not put on the reverse mortgage originally. HUD’s new rules for non-borrowing spouses allows them to remain in the home if the borrowing spouse passes away. Under the old rules, the younger spouse would need to pay off the reverse mortgage balance often requiring them to sell the home. Or it may be the non-borrowing spouse is now old enough to qualify for the reverse mortgage so this is an opportunity to add him or her back on to title of the home and get on the reverse mortgage with the security of both spouses being able to remain in the home as long as they desire.
To find out if you qualify to refinance your reverse mortgage or if you are interested in learning more about reverse mortgages, contact Maggie O’Connell for an informative, no-obligation analysis. Contact Maggie O'Connell - or call 800-684-9438
Reverse Mortgage Specialist NMLS #279499