Reverse Mortgage Refinance: What You Need To Know

February 1, 2019 By , ,

Basics of a Reverse Mortgage Refinance

Are you nearing retirement? Maybe you are already retired, but you’re not getting the most out of the equity in your home. If you are on a fixed income or looking to make a significant addition to your finances, a reverse mortgage refinance might be for you. Reverse mortgages have become a useful retirement planning tool for many homeowners.

If you are 62 years of age or older, you may be eligible for a Home Equity Conversion Mortgage (HECM), also known as a reverse mortgage. A HECM gives you the option to take advantage of the equity you’ve built up in your home over the years you’ve owned it, and turn it into money you can use today.

What is a Reverse Mortgage Refinance?

A reverse mortgage refinance is a loan insured by the Federal Housing Administration (FHA) and is designed for clients 62 years or older. Unlike a typical mortgage, where an individual makes regular payments to the lender, a reverse mortgage does not require monthly mortgage payments. Instead, the equity in your home is converted to cash which the borrower can receive monthly, or in one lump sum.

The lender charges interest on the amount of equity, which is then added to the borrowed amount. When the last borrower moves out of the home or passes away, the loan becomes due. The loan can simply be paid back by selling the home, and the funds owed go to the lender.

You will never owe more than the value of your home in a reverse mortgage loan, regardless of how much you borrow. And if the balance is less than your home’s value at the time of repayment, you or your heirs keep the difference.

Who Would Benefit from a Reverse Mortgage Refinance?

A reverse mortgage refinance would be excellent for those who:

  • Don’t plan to move.
  • Can afford the cost of maintaining their home, and keep up with property taxes and insurance.
  • Want to access the equity in their home to supplement their income in retirement.

Some people even use a reverse mortgage refinance to eliminate their existing mortgage and improve their monthly cash flow.

Reverse Mortgage Refinance Details:

  • Adjustable or fixed-rate available.
  • No monthly mortgage payment required.
  • Use the equity in your home as a source of income (with a HECM).
  • The amount owed cannot exceed the value of the home.

Benefits of a Reverse Mortgage Refinance:

  • Continue to live in your home and keep the title to your home – you still own the house.
  • Use your tax-free proceeds from a HECM for financial expenditures.
  • Leave the remaining home equity to heirs once the reverse mortgage is paid off.

Reverse mortgage interest is generally comparable to traditional mortgage rates, but instead of you paying monthly payments to a bank or lender, the bank or lender pays you.

 

Do you think a PRM Reverse Mortgage Refinance is for you? Contact us or fill the form below today!

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At the conclusion of a reverse mortgage, the borrower must repay the loan and may have to sell the home or repay the loan from other proceeds; charges will be assessed with the loan, including an origination fee, closing costs, mortgage insurance premiums and servicing fees; the loan balance grows over time and interest is charged on the outstanding balance; the borrower remains responsible for property taxes, hazard insurance, and home maintenance, and failure to pay these amounts may result in the loss of the home; interest on a reverse mortgage is not tax deductible until the borrower makes partial or full re-payment.
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