How to End a Reverse Mortgage
Reverse mortgages are real estate loans that pay monthly payments to the borrower, not the lender. These mortgages are exclusively available to seniors aged 62 and older. However, if you get a shoddy deal on a reverse mortgage, or simply do not wish to have the account anymore, you'll need to know how to exit the program. There is only one way to end a reverse mortgage without selling the home or the borrower dying: refinancing.
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Things You'll Need
- Reverse mortgage paperwork
- Income documents (paychecks, W2s, SSI statements)
- Tax returns
- Homeowners insurance
- Property tax information
Instructions
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Ending a Reverse Mortgage
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1
Determine the reason for refinancing. If a reverse mortgage lender promised something that he or she didn't deliver, you may be able to file a complaint with his or her company.
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2
Understand that ending a reverse mortgage (unless, of course you're refinancing into another reverse mortgage) will result in having to make monthly mortgage payments. This is a huge change from receiving monthly stipends from the mortgage company.
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3
Begin researching lenders and interest rates. Also, obtain a copy of your recent credit report to make sure you will be able to both qualify for a new loan and make the monthly payments. Visit www.annualcreditreport.com to get a free copy of your credit report.
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4
Strike when the iron is hot. Generally, in times of economic strength, interest rates are high. During periods of economic weakness, like following the 2008 credit crisis, interest rates tend to be lower and great deals are available.
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5
Speak with a trusted advisor before applying for new loans. An advisor can be a family accountant or lawyer, or even a family member with whom you've established a financial rapport. This is a huge decision and you must be confident that it's the right decision.
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6
Apply to at least two or three lenders. Provide all lenders with the information in the "Things You'll Need" section. This will enable the lenders to quickly pre-qualify you. You'll then be able to review each offer side-by-side.
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7
Choose the refinancing option that best meets your needs and goals. Make sure you know what those goals are, especially since you'll be paying a mortgage, not the other way around. For example, if you're looking to pay down debts, make sure you're getting out of debt faster and cheaper.
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Use the proceeds of the new mortgage to pay off the reverse mortgage balance (your new mortgage company should handle this). Begin making payments on the new mortgage.
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