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How can I refinance my moms reverse mortgage loan into a traditional mortgage so I can acquire the property?

By James E on 11.20.2018

Hi James,

It is the same procedure as refinancing any other loan.  Firstly, you would have to be on title to the property in order to obtain a loan in your name.  Lenders will not lend to you on a property you do not own so you need to be sure you secure the title.  After that, it’s just a matter of applying for the loan and when the loan closes and funds, the settlement agent will pay off the existing liens on the property which would include the reverse mortgage. 

If you are “buying” the property from your mom’s estate (if there are other heirs and you would not have title prior to applying for the loan), then the estate would have to sell you the home.  Again, it would be handled just like any other transaction but this time it is a sale transaction.  Whoever has the authorization to sell the property for the estate would enter into a contract to sell you the home and you would procure your financing in accordance with that sale.  Again, the new financing would pay off the reverse mortgage at the completion of the sale.

In either case, you would have to qualify for the new financing in accordance with the new lender’s requirements for the type of financing.  With the refinance on a property you already own, you may not have to have any down payment whereas with the purchase, a lender may want to see you place a minimum down payment into the transaction. 

You should obtain the help of a forward lender to determine those requirements for the loan type you wish to obtain depending on how this transaction would be structured.  It would probably help to know what would be required to close the forward loan in advance, so you know if your plans are feasible or not and then you would also know what you need to do with the title to the property, etc.

 

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