mortgage

5 facts about refinancing a reverse mortgage loan

Mortgage » Reverse Mortgage »

Sometimes a refi isn't the best move
Sometimes a refi isn't the best move | DigitalVision/Getty Images

Sometimes a refi isn't the best move

If your home has increased a great deal in value, you might think that refinancing your reverse mortgage loan is to your advantage.

However, a refi may not be the way to go if you might ever want to sell the home and downsize to something smaller. The loan would need to be paid off.

Instead of refinancing, here's an option you'd want to keep in your back pocket: You could eventually sell, pay off the reverse mortgage loan and use any remaining profits plus another reverse mortgage to purchase your next home.

Under the government's HECM for Purchase program, a borrower 62 or older can use a reverse mortgage loan to cover up to 52 percent of a home's purchase price and use cash on hand to fund the rest.

As with any other HECM loan, you still cover the property taxes, homeowner’s insurance and maintenance costs. But you live free of mortgage payments and pay off the loan when you sell, no longer occupy the home as your primary residence or can no longer meet the loan terms.

Think a reverse mortgage loan might be for you? Here are six questions you should ask.

advertisement


Connect with us