Reverse Mortgage Refinance
A Refinance That May Have you Jumping for Joy
Reverse + mortgage…sounds like a game of Uno mixed with Monopoly, right? I would be quite confused myself. It’s actually much simpler than it sounds. However, it’s not made for everyone because you need to be in the home for a good period of time. Not to mention, you need to be a tad bit mature to gain acceptance into the loan itself.
What is a Reverse Mortgage Refinance?
Before we dive into the topic of refinancing a reverse mortgage, let’s briefly discuss a reverse mortgage loan. This type of loan uses mortgage payments from built up equity over time. The key age that a borrower can institute a reverse mortgage is around 62 years old, and it must be his primary residence. If the owner’s death is impending, the heirs must give up their home or find a way to refinance to get the title out of a reverse mortgage.
Pros of Reverse Mortgage Refinance
Security is definitely something all of us need in life. There are a few major benefits of a reverse mortgage refinance. You can add your spouse to the loan and in the event you may perish or move to a facility due to health reasons – the spouse won’t get evicted. Also, the maximum loan amount may decrease if the spouse is younger. Another great thing about refinancing is you can get a larger amount of cash from the home especially when interest rates have dropped or the market value of your home increases. It all depends on how you want to utilize your equity.
If you are on to the cusp of 62, this may certainly be the option for you. One of the best ways to gauge your eligibility is by checking out the HUD website. You’ll see the changes in requirements as well as different options of a reverse mortgage. Before you consult a lender, make sure you are well informed before you jump the gun.
As far as a refinancing a reverse mortgage, it depends on your age, the loan amount, value of your home and interest rates. In terms of refinancing, the older you are and more valuable the home, the more you can take out in regards to home equity. The HUD website always keeps things updated because the requirements will sometimes change on a yearly basis. Keep yourself in the loop, so you don’t fall off the hook.
Cons of Reverse Mortgage Refinance
Right off the bat is the age requirement. There’s no telling if you’ll live in the home for that long. There are a lot of things that can change such as interest rates and even family issues. If a person dies, then the remaining heirs are left to pay a hefty mortgage or just relinquish the property. That can get quite taxing because of the huge responsibility. Additionally, lowering the interest rate does not necessarily mean taking more money out of your home equity. However, if you intend on refinancing with a new loan amount, it can severely diminish the equity you’ve built over time. Take the time to go over this decision because it can be very risky especially since the age is a factor. Closing costs tend to be higher as well, so it’s wise to discuss your plans with a qualified lender. Make sure it’s worth the trouble to refinance in the first place.