If you currently have a reverse mortgage, also known as a Home Equity Conversion Mortgage (HECM), you may be wondering if you can still refinance your loan. The answer is yes; refinancing a reverse mortgage, also known by many lenders as a HECM-to HECM Refinance, is simply replacing your existing reverse mortgage with a new one.
Benefits of Refinancing a HECM
- Property values have increased
- Rates are lower than your current mortgage
- Desire to change loan type (Fixed or Adjustable) or disbursement options
- Increase in loan limits
- Opportunity to add a spouse’s name to the loan
A common reason to refinance a HECM loan is to access additional funds that aren’t available with the current loan; this could be because their home has gained equity or because they have gotten older. Although all of these reasons are valid, refinancing is not always the most advantageous choice for reverse mortgage holders.
A HECM-to-HECM Refinance must provide a “Bona Fide Advantage”
To help borrowers decide if a reverse mortgage refinance makes sense, HUD created guidelines1 to protect homeowners. These HUD guidelines ensure that doing a HECM-to-HECM refinance can provide the borrower with a “Bona Fide Advantage” as it relates to their loan proceeds, closing costs and other product details. You may also visit www.hud.gov for information on HECM-to-HECM Refinance guidelines.
If you are interested in refinancing your HECM Loan, the good news is that the application process is very similar to the one you have already completed. HUD requires reverse mortgage counseling as part of the requirements to complete a HECM-to-HECM refinance; however, if you meet certain conditions, the counseling can be waived.2
To find out how to get the HECM-to-HECM refinance process started, or if you have any additional questions, you can learn more by calling 1.800.976.6211.
Important Disclosures:
1HECM Refinances – 2009-21: https://www.hud.gov/sites/documents/09-21ml.doc
2 Visit www.hud.gov to review the specific criteria related to HUD counseling requirements for HECM-to-HECM refinances.