04 January 2011 ~ 0 Comments

Reverse Mortgage Refinancing Can Be a Viable Option

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Home Page > Finance > Mortgage > Reverse Mortgage Refinancing Can Be a Viable Option

Reverse Mortgage Refinancing Can Be a Viable Option

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Posted: Oct 13, 2010 |Comments: 0
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Refinancing a reverse mortgage is a viable option for seniors. Maybe the interest rates have fallen sharply.  You may also refinance if the value of your home appreciates making it possible to get a new deal from your lender.    

Few people know that reverse mortgage loans can be refinanced.  But you have to bear in mind that it is always important to compare the benefits that you can get against the cost or expenses involved in refinancing.  As a rule of thumb, the benefits that you should get from refinancing reverse mortgage should be twice bigger than the costs.  

Before applying for reverse mortgage loan refinancing, you may want to consider the following important points first.

You Pay More when You Want Longer Payment Time

If you secured longer payment time, then it could mean lower monthly payments.  However, do take note that the amount of interest that you have to pay will also increase considerably.  What you need to do is to negotiate for a fixed rate when the existing interest rate in the market is lower.  This may result to a better deal for you.  But do not forget that the accrued interest will increase the total sum of your loan.  A bigger debt therefore could bring unpleasant surprises for your heirs. 

Consider Payment Time 

As a loan, a reverse mortgage must be paid back.  The pay back time however for a refinanced reverse mortgage could take years.  The refinanced reverse mortgage is due for payment when you move to a new residence, if the borrower passes away, or if you sell the home.  

The lender will calculate the final amount that you have to pay.  The final amount includes the capital, accrued interest, and the loan costs.  If the total costs exceed the value of the home, then the lender will collect the difference from the mortgage insurance to fully pay the loan. 

Understand the Non-Recourse Nature of Reverse Mortgage

Few borrowers understand what non-recourse loan is.  This type of loan simply means that the lender can not use any other asset of the borrower as payment for the cost of reverse mortgage. The non-recourse nature of reverse mortgage protects the borrower.  It is also the reason why you will not be required to produce credit history or income information.  The lender’s guarantee is the mortgage insurance.  The insurance makes sure that the lender will get his money back.  

Difference of Reverse Loan and Home Equity Loan 

Both loans use the equity of your home so you can get cash.  These loans have similar goals.  By using part of the equity, you will be able to draw money by converting the equity to cash.  However, home equity loans must be paid back regularly.  In contrast, a reverse mortgage loan does not require monthly payments.  The payment will become due when the loan will be closed.  

As a holder of reverse mortgage loan, you are responsible for the property taxes, hazard insurance, and other homeowner’s dues.  You must also repair the property there are damages.  Your reverse loan could become due and payable if you fail to comply with these obligations.

 

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Rob Blake -
About the Author:

Rob K. Blake, home loan expert and author, educates mortgage shoppers on finding local providers by state like Maine Mortgage Brokers and Lenders and provides reviews of national companies like The Provident Bank of NJ.

Questions and Answers

Ask our experts your Mortgage related questions here…200 Characters left

I have a friend who has metastic cancer. Originated in her breasts, now present in her liver, femur and spine. Is chemo a viable option to reduce the tumors?
With a reverse mortgage is there a limit on the withdrawl amount per month for a person with medicaid?
When a person with a reverse mortgage and medicaid dies,do both receive some of the proceeds when the house is sold?

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Rob Blakel

Finance>
Real Estatel
Nov 12, 2010

Discover the Benefits and Drawbacks of Private Loan Consolidation

Your federal loans can be consolidated into private ones but not the other way around. So you need to explore if private loan consolidation will work for you. It has some good benefits but also carries a few drawbacks.

By:
Rob Blakel

Finance>
Loansl
Nov 11, 2010

Reaffirming Debts Could Be an Option in Bankruptcy

Bankruptcy is the last available option of borrowers who can not get out of the debt burden. When filing for bankruptcy, you need to explore debt reaffirmation. This is an agreement that allows you to retain your assets but you have to repay certain debts.

By:
Rob Blakel

Finance>
Debt Consolidationl
Nov 10, 2010

Facts about Loan Modification for Borrowers with Two Loans

Do you want to know if you can modify two home mortgages? There is good news for you because modifying two loans is possible. Here are the basic facts about loan modification for borrowers with two home loans.

By:
Rob Blakel

Finance>
Loansl
Nov 09, 2010

Mortgages and the Things You Need to Know

Home buyers typically secure a mortgage to purchase a property. Paying in cash is usually not an option while there are also people who can not afford to pay cash. It can be assumed also that many people are already familiar with the complexities of home mortgages.

By:
Rob Blakel

Finance>
Mortgagel
Nov 08, 2010

Important Points to Consider When You Shop for Mortgage Loans

Most people get very excited when they decide to buy a home. That is because choosing different houses in the market is enjoyable. But you have to take note that the whole home buying process is not always full of fun and excitement.

By:
Rob Blakel

Finance>
Mortgagel
Nov 05, 2010

How to Delay Foreclosure in 3 Easy Ways

There are many homeowners who can not understand the intricacies of the foreclosure process. The confusion stems from the fact that the process is very complicated. And to make matters worse, the government’s modification program is not working as planned.

By:
Rob Blakel

Finance>
Mortgagel
Nov 04, 2010

Determine the Right Time to Apply for Mortgage Refinancing

Homeowners who can not keep up anymore with their mortgages should consider refinancing. This loan is a long term commitment but it offers good benefits for borrowers. If you are applying for refinancing, the benefits should be greater than the cost of the loan.

By:
Rob Blakel

Finance>
Mortgagel
Nov 03, 2010

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