With HECM Reverse Mortgages there is an old misconception that once you do a Reverse Mortgage you’re stuck with the loan for life. Fortunately this is wrong. A Reverse Mortgage is the same as any mortgage in that you can sell the home, Pay off the Mortgage or refinance it.
Let’s look at these options a little closer.
I’ve had a number of clients do a Reverse Mortgage Reset to add a spouse. This usually happens when the current homeowner marries after setting up their Reverse Mortgage and wants to protect their spouse financially if they were to pass away first.
Another reason adding a spouse with a HECM Reset is helpful is that up until recently a spouse that was not 62 or older was not protected by the Reverse Mortgage. This put them in a very precarious situation further down the road if the older spouse who did the Reverse Mortgage passed away first. By doing a HECM to HECM Refinance both homeowners are protected by the Reverse Mortgage.
Property Appreciation rates in Utah, Nevada, and Colorado are soaring and have reached double digits in some cities. When homes appreciate like this, a Reverse Mortgage can be refinanced and set to the current appraised value. The higher value allows the homeowner to cash out additional funds for personal use.
Interest Rates and Mortgage Insurance Rates on Reverse Mortgages are generally lower now than they have been in recent years. By doing a Reverse Mortgage Refinance you may be able to lock in a lower rate to protect more of your home’ equity. For example on a $200,000 mortgage a .5% reduction in rate saves nearly $50,000 in interest charges over a 20 year period.
If you have a Reverse Mortgage it doesn’t hurt to talk with a Loan Officer to see if you’d qualify. But because of changes to the lending limits it is usually harder to qualify if your Reverse Mortgage was originated prior to October 2017. I have however, seen a lot of people qualify if they originated their Reverse Mortgage between 2010 and 2013 as the real estate market was bottoming out.
The HECM to HECM Refinance is a loan that the average Loan Officer isn’t familiar with. Be sure to talk with a Reverse Mortgage Specialist to make sure you will qualify to Refinance your Reverse Mortgage. You don’t want to be charged for the cost of an appraisal unless you know you qualify.
If you or someone you love would like to look at your options to maximize the benefits of your Reverse Mortgage call me today.