Can I Refinance A Reverse Mortgage? It’s an interesting question, especially in these days of economic uncertainty, especially for seniors. Because with a reverse mortgage seniors (actually anyone over 62) has the ability to convert the equity in their home into cash flow.
Now, because of my involvement with the Long Island Chapter of the National Aging-In-Place Council, I have the opportunity to meet with people in the reverse mortgage industry on a regular basis.
The short answer is yes, but there are a lot of factors to consider as to whether such a refinance is in your best interests.
Can I Refinance a Reverse Mortgage – What Are The Advantages
There definitely are some positive reasons to consider the reverse mortgage. They include…
FHA Limits On Reverse Mortgages Have Changed
Each year, the maximum amount that you can borrow on a reverse mortgage (or any other FHA-insured loan) changes. As I write this in January 2017, the maximum amount of a reverse mortgage is $636,150. 1 So this means that you could potentially qualify for a larger reverse mortgage, meaning that you can get a larger monthly payment from the equity in your home.
Has Your House Appreciated In Value
This dovetails into the first point. If your home has appreciated in value in the last several years, and most of the housing market has been on an upswing over the last 5 years or so, then this MIGHT be a good time for you to consider a reverse mortgage refinance.
Qualifying for a reverse mortgage is based upon age and the equity in your house. Your credit score does not come into play. [For a primer on how reverse mortgages work click here] So the more equity you have the more money you can get from your home.
Interest Rate Drop
This one you need to be careful of. Interest rates have been at historic-lows for years (some would argue decades) in an effort to jump start the economy. So the odds of you benefiting currently from this are pretty steep. Still, it is worth mentioning here.
Get Spouse On Title Of Property
This could be a VERY important point. In order to qualify for a reverse mortgage, ALL persons on title to the property have to be age 62 or more. And with the economy the way it is, many people considering reverse mortgages are taking them younger and younger.
This means that if, for example, a husband is age 62 and a wife is 59, the wife CANNOT be listed on title to the property in order to get a reverse mortgage.
Needless to say, this can create a precarious situation if at any point in the next 3 years in our example something should happen to the husband while the wife is not on title to the property.
In this example, when husband and wife reach age 65 and 62 respectively now would be the ideal time to refinance the reverse mortgage so that both husband and wife can be on title to the property.
Can I Refinance a Reverse Mortgage – Are There Disadvantages
Of course, there are closing costs associated with a reverse mortgage refinance. And if you are refinancing the loan, that means that you are paying these closing costs twice. That is an important consideration. Closing costs for a reverse mortgage are similar to any other mortgage so you need to be careful and consider the benefit vs the costs when you are asking yourself “Can I Refinance A Reverse Mortgage”?
You can refinance it but it might not be in your best interest. That’s why you should speak to a professional who can walk you through the ins-and-outs of the process.
To that end, I am grateful for the insights of fellow NAIPC-member Rick Cashman. If you have any questions about the process above you cam contact Rick at 516-458-7320 or email him at firstname.lastname@example.org. I have known Rick for several years through our mutual involvement with the Aging-In-Place Council on Long Island.
And while I do not know if he can help you, because every situation is different, I can vouch for the man’s character and integrity.