|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Or Call Now to
Speak with Our Experts
1-800-733-9532
|
|
|
|
|
|
|
|
Refinancing Your Reverse Mortgage
|
|
|
 |
The Home Equity Conversion Mortgage (Reverse Mortgage) was established by Congress in 1983, more than 25 years ago and has helped hundreds of thousands of homeowners aged 62+ live richer lives. These borrowers have experienced personally the unique benefit of accessing cash taken from the hard earned equity in their home with no required monthly payments.
|
|
|
|
Over the years, FHA/HUD has improved the Home Equity Conversion Program. One of the greatest changes that benefit homeowners was the increased loan limits which allow the borrower to access more home equity. So, after enjoying the benefits of using part of their home equity, homeowners with higher values may now qualify for more cash through refinancing the original loan. A good thing just got better.
Every year HUD adjusted upward county lending limits to keep pace with increases in home values. Now, the Housing and Economic Recovery Act of 2008, passed on July 29, 2008 has across the board raised the FHA lending limit. That means you leverage more cash from your home. For many, it is now possible to access additional equity by refinancing your existing Reverse Mortgage.
Let’s look at a real-life example. A 62+ homeowner took out a Reverse Mortgage in 2008 in Brevard County, Fl. His house was worth $725,000 with a $177,000 mortgage balance. Last year, in Brevard County the FHA lending limit for a Reverse Mortgage was $207,061. So in reality $517,939 of his home value wasn’t even considered when the FHA determined how much equity he could access and turn to cash. That was fine with him because he was still qualified to receive enough money to pay off his existing mortgage. But that was about all. The homeowner was now free of the burdensome 1,200 dollar a month mortgage payment…life was good.
Now, fast forward to 2009. Real estate has crashed and his home is now worth 525,000. Along comes the Stimulus Package and HUD/FHA is mandated to increase its lending limits. Our happy homeowner now chooses to refinance his Reverse Mortgage. With the new lending limits he can use the full value of his home when calculating how much of his hard earned equity he can access with no monthly payments.
With HUD’s new higher lending limits, our homeowner can now get a Reverse Mortgage and pull $320,000 of equity out of his house. Some closing costs have been reduced or need not be paid when refinancing, freeing up more even more money. After paying off the first Reverse Mortgage of $177,000 plus accrued interest, the homeowner still has an additional $130,000 in funds that he can use for anything he chooses!
In addition to more money, many homeowners who now qualify to refinance have found an additional benefit to a Home Equity Conversion refinance. The fixed rate Reverse Mortgage.
Until now, the overwhelming majority of Reverse Mortgages were adjustable rate programs. Today the fixed rate program often allows more equity into cash than the adjustable rate program.
The bottom line is that the current economic environment isn’t one of smooth sailing for our economy. That means most of us 62 years and older remember the bad old days of the late 70s and early 80s where interest rates reached the double-digits. For many of the homeowners who qualify to refinance their Reverse Mortgage the peace of mind of a fixed rate is a real factor in making the step to a fixed rate HECM refinance.
Obviously, every situation is unique. It's important to work with someone who is going to take the time to go over all your options with you and find out what makes the most sense for you. Refinancing a Reverse Mortgage can provide you with a lot of extra benefits but never forget it is all about YOU. It should only be done if it really benefits you and puts you closer to what you want to accomplish.
|
|
|
|
[ TOP ]
|
|
