How to Refinance a Reverse Mortgage


A reverse mortgage is a loan that allows seniors over the age of 62 to convert part of their home equity into a loan. The loan becomes due when the last borrower leaves the home. Refinancing a reverse mortgage is renegotiating a new loan agreement based on a change in your situation. The challenge is determining which factors affect your monthly payment the most.

Determine the main drivers of refinancing eligibility. Eligibility is based on current age, current interest rates, size of the existing loan and the current value of your home. Put simply, the older you are and the more valuable your home, the more you can take out using a reverse mortgage. This holds true for refinancing a reverse mortgage as well.

Review loan requirements by HUD. These change every year. See Resources for a link to the website.

Understand the consequences. Lowering your rate will not result in taking more money out of your home's equity. However, if you refinance based on a different loan amount (that is, perform any action that increases your actual loan amount), you will be reducing the equity in your home.

Consider closing costs. Reverse mortgages usually cost more. Ask your broker exactly what the closing costs are before taking any action. Compare these costs against the amount you expect to save by refinancing.

Contact the Home Equity Conversion Counselor for your area. These counselors are supported by HUD. See Resources for help with finding a counselor in your area.

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