Refinancing a reverse mortgage is easy and cheaper to do. There is never a prepayment penalty with a reverse mortgage so if the rates drop or if your house value goes up, you can refinance to better your situation. The loan is cheaper the 2nd time because of a new regulation implemented by the US Department of Housing and Urban Development. Instead of paying the full upfront mortgage insurance premium (MIP) on a refinanced reverse mortgage, the new regulation would enable a borrower to be credited for the amount of MIP paid on the first loan.
In many cases the MIP is the most expensive cost associated with a reverse mortgage, so not having to pay that again can really make a refinance cost effective. Some of the most popular reasons to refinance a reverse mortgage are:
- Interest rates drop
- House value goes up
- Add a spouse that was not on the original loan