Refinancing a Reverse Mortgage

Why Refinance a Reverse Mortgage?

Refinancing a reverse mortgage should be done if it can access more of your home's equity, lower your current interest rate, or utilize one of the other net-tangible benefits to the borrower.

Reasons to Refinance a Reverse Mortgage

The basic rule of thumb as determined by HUD, known as the “refinance benefit factor,” is that if the borrower stands to gain five times the financial benefit from refinancing over the required closing cost, then it makes sense to consider a refinance. You should also consider refinancing if:

Your current home value has increased
Interest rates have dropped
You already have a HECM
pros
  • Allows you to access the additional equity in your home
  • You can add your spouse to your new loan, allowing them to keep your home if you pass away
  • If the borrower received HECM counseling from an FHA-approved counselor, they may waive additional HECM counseling
cons
  • There are costs associated with the refinance
  • Additional HECM counseling may be required

When it Makes Sense to Refinance

Your home value has considerably increased
You obtained your loan at a lower lending limit than the current limit ($679,650)
You will benefit from a lower interest rate or margin
You are adding your spouse to the loan to protect them from having to sell the home upon your death
You have a proprietary reverse mortgage and want to refinance into a HECM

Qualifications for Reverse Mortgage Refinance

Must have equity in your home

Must have equity in your home

The "refinance benefit factor" rule must apply

The "refinance benefit factor" rule must apply

Your interest rate or margin can improve

Your interest rate or margin can improve

Did You Know...

Did you know loan limits increased earlier this year? The loan limit for HECM reverse mortgage loans increased by $43,500, from $636,150 to $679,650.