Thursday, August 23, 2012

Refinancing a Reverse Mortgage??

Refinancing a reverse mortgageThere is a misconception out there that once you get a reverse mortgage you are done; no more watching what the rates do or if closing costs go down.  Once you have a reverse mortgage you can get up to refill your water glass when the mortgage commercials come on while you're watching TV because this now doesn't apply to you.  Many people think that the reverse mortgage is the last loan they will ever get.  While this is true for many reverse mortgage borrowers, the fact is: You can refinance a reverse mortgage! 

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
The thing to remember is once you have a reverse mortgage, you are not locked into the loan.  You can refinance it at any time onto a new reverse mortgage if the conditions are better or to a conventional mortgage if the reverse was not right for you.  If you currently have a reverse mortgage and are wondering about your refinance options, check out this reverse mortgage calculator to see your options.

1 comment:

  1. Before thinking about refinancing,you need to properly understand what all that a refinance involves.Your property is a valuable asset,So you have to plan carefully when choosing a lender,specific mortgage terms,Advantages and disadvantages of this type of loans.