Seniors who took out a reverse mortgage on their home in previous years may find that their home value has increased. These rising home values and an increased max claim amount for Home Equity Conversion Mortgages (HECMs) could make it the right time to consider refinancing. What borrowers may not realize is that there is more they can accomplish than just accessing additional cash.
Adding A Spouse
If your spouse is not already on the reverse mortgage, refinancing and adding them to the loan may help protect them in the event the loan becomes due and payable. For example, adding a spouse to the loan ensures that they can continue to live in the home payment free if the borrower passes away.1
If your interest rate is higher than 4%, it could be beneficial to refinance and lock in a lower rate. Rates are currently lower than they have been historically which helps even for reverse mortgages.1 If you’re currently in an adjustable rate mortgage that fluctuates, you may find security in locking a low fixed rate. Furthermore, if you are in a fixed rate mortgage, it’s likely refinancing into either a new fixed or adjustable will still be lower than your current rate.
If the borrower’s home value has increased since they took out a reverse mortgage, this means that more home equity may be available if they refinance. Furthermore, with the max claim amount increasing to $765,600 in 2020, if a borrower’s home was appraised at or above the following amounts when they originally funded on their reverse mortgage, it’s likely they can receive additional loan proceeds:
Has your home value increased since closing? Call (800) 976-6211 to speak with a licensed reverse mortgage loan officer to see if you could benefit from refinancing.
1 You must live in the home as your primary residence, continue to pay required property taxes, homeowners insurance, and maintain the home according to FHA requirements. Failure to meet these requirements can trigger a loan default that may result in foreclosure.