Hi ARLO, my mom passed away, I have inherited her home with a reverse mortgage on it. Can I still try and refinance the loan or home, or do I have to get a home loan myself?
The reverse mortgage becomes due and payable when the last borrower on the loan is no longer living in the property. If mom was the last borrower, when she passed the loan became due and payable which gives you several options.
I assume from your question that you would like to stay in the home and that still gives you options. Assuming that you don’t have the funds to pay the outstanding balance off without taking out a new loan, then you would want to explore the loan of your choice which might or might not include a new reverse mortgage.
You cannot refinance a reverse mortgage with a new reverse mortgage, unless you were the original borrower. You can however, seek your own reverse mortgage on the home as long as you are 62 years of age or older and meet HUD’s current guidelines (which includes income and credit qualification and you must be living in the property).
The amount you would receive on your reverse mortgage would have to be sufficient to pay off what was owed on the old loan, or there would be a shortfall that would require you to bring in some cash to close the loan.
This is allowed, the question is whether or not it is necessary or, if so, practical in your circumstances. You can contact us and we would run a reverse mortgage proposal based on your age, the value of the home and the amount of the existing loan amount to make this determination.
You can always seek a new home loan other than a reverse mortgage if that is what you choose to utilize to pay off the existing balance. In that case, you could contact any lender, determine the available loan amounts and guidelines and apply for the mortgage.
The reverse mortgage would be paid off through the closing of the new loan by title/escrow when you closed your new loan.
There are positives and negatives to both options. A traditional loan would probably give you access to a higher loan amount in relation to the value of the home.
The traditional loan will require you to make monthly mortgage payments as well so it would typically take more income to qualify for the standard or forward loan.
It would just be a matter of determining which loan best suited your needs. Either way, you will have to obtain the financing in your own name for the new loan.
Additional resources at All Reverse Mortgage: