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How can I refinance my mom's 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 to obtain a loan in your name.  Lenders will not lend to you on a property you do not own, so you need to 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, including the reverse mortgage. 

If you are “buying” the property from your mom’s estate (if there are other heirs and you would not have a title before 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 a contract to sell you the home, and you would procure your financing by that sale.  Again, the new funding would repay the reverse mortgage after the sale.

In either case, you would have to qualify for the new financing by 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 get 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, and then you would also see what you need to do with the title to the property, etc.


Also See: Repaying Reverse Mortgage After Death: Here are 6 Steps We Recommend