Refinance My Reverse Mortgage
It is very possible to refinance your existing reverse mortgage into a new reverse mortgage.
In fact you can refinance an already refinanced reverse mortgage and so on. Although there is no set amount of times that you are allowed to refinance there does have to be a benefit to the homeowner.
There are a few reasons why the majority of homeowners look into refinancing their current reverse mortgage.
Has the value of your property increased since obtaining your reverse mortgage?
Have you noticed that interest rates have been going down in the world?
Or did you just feel like it was a good time to check-in and see if there was anything bigger and better?
All of these are great reasons to look into refinancing your reverse mortgage a little more 🙂
Reverse Mortgage Refinancing for MORE MONEY
One of the main benefits attributed to a reverse mortgage refinance is obtaining more money.
One of the most common ways this can happen is if you notice your property value increase.
This additional increase might allow you to refinance your reverse mortgage and access that additional home equity.
Another common way that homeowners can access more money by refinancing their reverse mortgage is with new programs.
Their is a jumbo reverse mortgage program that allows for home values to be used over the FHA lending limit of $726,525.
This means if your current home value is over $726,525 you might already qualify to access a lot more of your homes equity.
With recent program additions to the jumbo reverse mortgage this additional equity can be secured as a lump sum cash-out payment and/or a line of credit.
Reverse Mortgage Refinancing for LOWER RATE
Another benefit that can be achieved by a reverse mortgage refinance is lowering the current loans interest rate.
Interest rates are ever changing in the world, which can lead to advantages when seeking lower rates.
Also, reverse mortgage programs are ever changing as well. There have been many times when a new program can allow for refinancing whether it be for a lower fixed rate or a lower adjustable rate margin.
Lastly, the ongoing mortgage insurance premium can be beneficial to a refinance of your reverse mortgage.
Most recently the ongoing mortgage insurance premium was lowered from 1.25% to .50%.
If a homeowner was able to find a better reverse mortgage rate, or program then they would also benefit by possible saving an extra .75% on their ongoing mortgage insurance premium.
Reverse Mortgage Refinance Guidelines
As we stated in the previous section a “benefit” is needed when applying reverse mortgage refinance guidelines.
What do we mean by a benefit?
The most common examples are to obtain more money or a lower rate, but it can also be for other benefits like adding a spouse.
To determine if your benefit meets current HUD/FHA reverse mortgage refinance guidelines we encourage you to speak with a reverse mortgage advisor using ReverseAdvisors.org search.
Some of the most common reverse mortgage refinance guidelines are as follows.
5% Refinance Guideline
This rule applies to how much additional money a homeowner can qualify to receive by refinancing their reverse mortgage.
The additional money that a borrower looks to receive with a refinance needs to be at least 5% of the new proposed principal limit.
The principal limit is the total available money that a homeowner qualifies to receive.
Example: If the new principal limit is $250,000 then a refinance needs to qualify borrowers to receive at least $12,500.
$250,000 x 5% = $12,500
If the homeowner was receiving at least a $12,500 benefit once all is said and done then the 5% rule has been passed 🙂
5x Refinance Guideline
The 5x rule requires that the homeowner receive 5x the amount of money compared to the total closing costs and fees.
Example: Using the same scenario above where the new principal limit is $250,000 and the borrower must receive at least $12,500 as a benefit.
If the total reverse mortgage closing costs were $5,000 then they 5x rule would not pass reverse mortgage refinance guidelines.
$12,500 / $5,000 = 2.5x (Less than 5x)
In this same scenario let’s assume that instead of the homeowner receiving the lowest allowable benefit of $12,500 that they are receiving $30,000.
$30,000 / $5,000 = 6x (More than 5x)
This scenario works! The benefit is over 5x the cost to complete the reverse mortgage refinance and this would pass reverse mortgage refinance guidelines.
18-Month Refinance Guideline
If you are refinancing a HECM reverse mortgage into another HECM reverse mortgage then there is a minimum of 18-months seasoning.
18-months must have passed since the closing date of your current reverse mortgage to the application date of your reverse mortgage refinance.
If you are unclear where you stand with this rule our advice is to find your closing HUD from your current reverse mortgage and confirm your closing date.
Please know that if you are refinancing a HECM reverse mortgage into a jumbo reverse mortgage then the seasoning requirements may be different.
Same could be said if you are refinancing a jumbo reverse mortgage into another jumbo reverse mortgage. Seasoning requirements may be different.
A reverse mortgage advisor can assist from there in helping figure out these varying compliancies.
Find only the best reverse mortgage for you
Reverse Mortgage Refinance Calculator
Now that you have a more detailed picture on how to refinance your reverse mortgage you might be looking for a reverse mortgage refinance calculator.
In our experience the online reverse mortgage refinance calculators can show programs that may, or may not, be currently accessible.
We encourage you to use our ReverseAdvisors.org reverse mortgage advisor search.
It allows you to see top reverse mortgage companies and advisors that work in your state and might even specialize in your county.
ReverseAdvisors.org feels this is the best way for you to start to review your reverse mortgage refinance.