Bankrate Explores Reverse Mortgage Refinancing Options

There’s a wealth of information available today among consumer-facing and trade publications that aims to explain reverse mortgage basics and specifics. A Bankrate publication this week delves deeper to describe some of the considerations about refinancing from one reverse mortgage to another. 

In its compilation of “5 facts about refinancing a reverse mortgage loan,” Bankrate notes some of the reasons for refinancing from one Home Equity Conversion Mortgage into another: adding a borrower to the loan, tapping into more equity in the case where a home has gained substantial value, or accessing a different rate or loan type than was initially secured. 

The article briefly explains five considerations around refinancing, from the steps it takes to the fees required and the treatment of mortgage insurance and HECM counseling. 

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There are also instances where a HECM-to-HECM refinance may not be the best option, Bankrate points out. In some of those cases, selling the home and purchasing a new one with a HECM for Purchase could be a worthwhile option. 

“If your home has increased a great deal in value, you might think that refinancing your reverse mortgage loan is to your advantage,” Bankrate writes. “However, a refi may not be the way to go if you might ever want to sell the home and downsize to something smaller. …
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.”

Read the full article on Bankrate

Written by Elizabeth Ecker

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  • One consideration regarding HECM to HECM refinances is often overlooked – before 2008, HECMs had county lending limits that were very limiting. Imagine a $500k home in 2007 with a MCA capped at $200k. That same borrower may have a MCA of $636k today.

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