What are the closing costs or fees for a reverse mortgage refinance?

When refinancing your reverse mortgage, you will encounter various closing costs, including title, escrow, and appraisal fees. Notably, the portion of the Mortgage Insurance Premium (MIP) initially paid on your first reverse mortgage won't be charged again when you refinance for the first time. However, should there be an increase in your home's value, the additional MIP cost, calculated based on the home's new value, will be added to your refinancing costs. It's also noteworthy that lenders may offer credits to cover some or all of these fees when refinancing, depending on market conditions. Although these costs exist, your lender might absorb some of them on your behalf.

Can a jumbo reverse mortgage be used to refinance a government HECM loan?

Yes, a jumbo reverse mortgage can refinance an existing government HECM loan. To ascertain if this option is appropriate for you, kindly contact our office with your most recent reverse mortgage statement, allowing us to conduct the required calculations to determine its advantage.

Can I be added to my parent's reverse mortgage instead of refinancing if I am 62?

You cannot be added to an existing reverse mortgage as a new borrower. The terms of a reverse mortgage are established based on the youngest borrower's age at the time of loan closure, along with other considerations like property value, interest rates, and life expectancy projections. Due to unpredictable repayment timelines, adding borrowers after the fact would complicate risk calculations and benefits determination. However, your parents can refinance their reverse mortgage, incorporating you into the title now that you're 62. At this age, you're at the minimum threshold for eligibility, meaning you might qualify for the least amount the program offers. For the refinance to be feasible without additional cash input to cover any shortfall between the available benefits and the amount owed on the current loan, the property's value must have significantly increased or been valued above the HUD limit initially. While challenging, this scenario might work if the property has appreciated substantially or the existing loan was secured when HUD's valuation limits on higher-value homes were lower.

Is an appraisal required for refinancing a reverse mortgage?

Like any other refinance, it's a new loan and will be treated as such. That means you will have a new appraisal with an interior and exterior inspection, and the lender will review your income and creditworthiness.

Can I add a sibling to my reverse mortgage without refinancing it?

Once a reverse mortgage loan has been closed, you cannot add another borrower to the existing loan. You can add her to the title so that the property would pass to her if anything happens to you if you wish, but the loan would be due at that time, and she would need to refinance the loan then or sell the home.

Will my overdue property taxes be paid off if I refinance my reverse mortgage?

Any outstanding taxes would need to be paid off to refinance your loan. Additionally, under HUD's current guidelines, you must establish a Life Expectancy Set Aside (LESA) account for future tax and insurance payments. This means you must have enough funds from the refinance to cover your existing loan and the LESA. I urge you to explore this option promptly. If refinancing is not feasible, it's important to note that keeping current with your taxes and insurance is a requirement of your existing loan. Being delinquent on your taxes places you in default, risking the loan being called due and payable. Should refinancing not be possible and you're unable to settle the due taxes, consider alternatives like selling the property and moving to a more affordable one. This proactive approach is crucial before potentially losing control over such decisions if the loan is called due.

Will I have to complete all the same paperwork again to refinance my reverse mortgage?

When refinancing your reverse mortgage, it's important to understand that this constitutes a new loan agreement. You must complete all the requisite documentation as you did for your initial loan. In fact, additional documentation may be required depending on the timing of your first loan. For instance, if your original loan was issued before HUD implemented financial assessment guidelines, which include reviewing the income and credit history of reverse mortgage borrowers, you may have yet to provide income verification or proof of payment history previously. However, HUD now mandates these requirements for all loans, so be prepared to supply this information during refinancing.

Is there an income requirement to refinance my reverse mortgage?

Yes. Since 2014, HUD has implemented financial assessment guidelines for reverse mortgages, utilizing the residual income method to qualify borrowers. This approach requires borrowers to have a certain amount of income remaining after paying off debts and property-related expenses, adjusted for family size. This qualification criterion is designed to be inclusive, allowing for the dissipation of assets and even the loan proceeds to assist in meeting these requirements. The aim is to ensure borrowers can comfortably afford to live in their home post-loan closure. Should you fall short of these residual income requirements, even after considering a Life Expectancy Set Aside (LESA) for tax and insurance payments, HUD's stance is that it's preferable to confront this situation now, with full equity in hand rather than later, when equity might be diminished, and relocating becomes inevitable.

If I'm the only one on the reverse mortgage but live with someone else, can I refinance without their involvement?

Refinancing your reverse mortgage does not necessitate documentation from individuals living in your home, provided they have no legal interest in the property. This applies whether the resident is a family member, a renter, or a non-owner sharing your living space. If the person cohabitating with you is neither a spouse nor listed as an owner on the property title, their documentation is not required for the refinancing process of your loan.

See If a Refinance Makes Sense for You

Q: Can you refinance if you have a reverse mortgage?

Yes. The guidelines on a reverse mortgage permit the refinancing of the loan to a new reverse mortgage loan as long as the new loan provides a tangible benefit to the borrower. A tangible benefit is determined by the amount of net proceeds available or the addition of a new spouse. Two tests must be passed to deem the refinance beneficial: the proceeds test and the closing cost test (commonly referred to as 5-1). The proceeds test is straightforward and requires that the new loan provide proceeds of 5% of the new Principal Limit. The closing cost test or 5-1 test requires that the new Principal Limit be at least 5 times the closing costs higher than the current loan Principal Limit.

Q: What are the HECM to HECM refinance guidelines?

To qualify for a HECM refinance, you must have your existing reverse mortgage seasoned for 18 months. Additionally, the new reverse mortgage would need to pass both benefit tests (Proceeds and closing Costs) or provide the benefit of adding a new spouse to the loan.

Q: Can you refinance a reverse mortgage into a conventional loan?

Yes. You can refinance from a reverse mortgage into any conventional mortgage, HELOC, etc. Reverse mortgages have no prepayment penalties and provide a monthly statement that always outlines your current outstanding loan balance. When you apply for a new mortgage, the lender will submit a demand for a payoff like any other refinance process.

Q: Can you take out a second reverse mortgage?

Not likely. While reverse mortgages allow for subordinate financing, you will not likely find a lending institution interested in lending a second behind a reverse mortgage due to its negative amortizing nature. Suppose you want to take additional cash out from your home’s equity and already have a reverse mortgage. In that case, your best bet is to refinance the reverse mortgage into a larger HECM loan or a traditional mortgage. Some FHA loan programs will lend behind a reverse mortgage.

Q: What is the difference between a refinance and a reverse mortgage?

A traditional refinance is when a borrower refinances a “forward mortgage” into another mortgage to benefit from a lower interest rate or take cash out for home improvement, debt consolidation, etc. A reverse mortgage is an entirely different program that serves seniors aged 62 and older, offering the ability to eliminate the mortgage payment for the borrower’s expected lifetime.

Q: What is the 5 times rule for reverse mortgages?

The “5 times rule” that people often refer to for reverse mortgages is a reference to the benefit tests required to refinance a reverse mortgage loan to a new reverse mortgage loan. The first 5 refers to the closing cost test. To pass this benefit test, the new loan must exceed the existing loan amount by a dollar amount of at least 5 times the closing costs to get the new loan. For example, if the closing costs are $5,000, the new loan must be at least $25,000 larger than the existing loan. The second 5 refers to the proceeds test. To pass this benefit test, the new loan must provide for a minimum of 5% of the new loan amount as available cash proceeds. For example, if the new available loan amount is $200,000, the borrower must receive at least $10,000 in available proceeds. To refinance a reverse mortgage, the homeowner must pass these benefit tests.

Q: What is the difference between a refinance and a reverse mortgage?

You're not limited to your current lender for refinancing your reverse mortgage; you can explore options with any reverse mortgage lender available in the market.

Instant Refinance Quote With Today's Rates & Limits

Michael G. Branson, CEO of All Reverse Mortgage, Inc., and moderator of ARLO™, has 45 years of experience in mortgage banking, with the past 20 years devoted exclusively to reverse mortgages. A Forbes Real Estate Council member, he developed the industry's first fixed-rate jumbo reverse mortgage and has been featured in Forbes, Kiplinger, the LA Times, and Yahoo Finance. (License: NMLS# 14040)

Cliff Auerswald, President of All Reverse Mortgage, Inc., and co-creator of ARLO™ — the industry's first real-time reverse mortgage pricing engine — has 27 years of experience in mortgage banking, with 20+ years focused exclusively on reverse mortgages. A recognized expert in reverse mortgage technology and consumer education, he has been featured in Kiplinger, Yahoo Finance, Realtor.com, and HousingWire. (License: NMLS# 14041)

H2H

Reverse Mortgage Refinance: 2026 Rules, Rates & Costs

Yes, you can refinance a reverse mortgage when the new loan conditions provides a larger cash benefit or ability to protect a younger spouse. HUD's HECM 5x benefit test exists to enforce safeguards and anti-churning.

By Michael G. Branson

CEO · 45 yrs in mortgage banking

Edited By Cliff Auerswald

President · All Reverse Mortgage Inc.

Updated Nov 14, 2025 ⏱ 8 min read ✓ Fact Checked HUD-Lender #26031-0007 68 comments

If you are considering a reverse mortgage refinance, you are not alone. Over time, your home value, your needs, and HUD’s rules can all change. A refinance can help you access more equity, protect a younger spouse, lower interest costs, or move into a loan that fits your situation today.

In this guide, I explain when refinancing makes sense, the 2026 HUD rules and limits that apply, and what you can expect from start to finish.

Table of Contents

• Why 2026 Can Increase Your Available Proceeds

• How a Reverse Mortgage Refinance Works

• HUD’s 5 Times Benefit Rule Explained

• Updated MIP Credits for Refinances

• Key 2025 HUD Rule Changes

• HECM Reverse Mortgage Refinance Rates

• Jumbo Reverse Mortgage Refinance Rates

• Summary Table: When a Reverse Mortgage Refinance Makes Sense

• In-Depth FAQ

Homeowners usually consider refinancing when one or more of the following apply:

Your home has appreciated, and you may qualify for more proceeds
Your original loan used an older and lower FHA lending limit
You want to add a younger spouse who was not originally eligible
Today’s rates or margins are lower than what you have now
Your current loan still includes servicing fees
Your home value exceeds the FHA limit, and a jumbo product may increase access to funds

After more than 20 years of helping older homeowners, these are the most common situations where refinancing creates real and measurable benefits.

Expert Insight from Michael Branson, CEO: “When someone asks us to review a refinance, the first thing I look for is whether the numbers genuinely improve their situation. If the benefit is not there, we will say so. There is no value in doing a refinance that does not strengthen a homeowner’s long-term position. A proper refinance should leave you better off than where you started.”

Why 2026 Can Increase Your Available Proceeds

The 2026 HECM limit is $1,249,125. If your original loan was set using a lower limit, updating to today’s cap can increase the principal limit used to calculate your benefits. Many homes have also appreciated since earlier loan years, which may further expand your eligibility.

Borrowers who took out a loan before 2015 may also benefit. At that time, younger spouses were often removed from the title to qualify. Under HUD’s new rules, a refinance can add the spouse back on the loan as an eligible spouse. This helps protect their long-term ability to remain in the home.

A refinance can also help you:

Remove outdated servicing fees
Reduce interest accrual
Increase the growth rate of an adjustable line of credit
Access more funds through a jumbo reverse mortgage if your home exceeds the FHA limits

Expert Insight from Michael Branson, CEO: “Many homeowners who closed their reverse mortgage years ago are often surprised by how much more they can qualify for today. Home values have risen, FHA limits have increased, and together they can open the door to more of your available equity than you had access to before.” Calculate your new lending limit with ARLO™ Insights! →

How a Reverse Mortgage Refinance Works

A simple overview

Initial Review
A lender calculates your new principal limit based on your age, current home value, and today’s interest rates.
Financial Assessment and Counseling
FHA requires a review of your ability to continue maintaining taxes and insurance. Most borrowers also complete new HUD counseling unless they qualify for a waiver.
Application and Disclosures
Your lender provides required disclosures. This includes the HUD Anti-Churning Disclosure that shows your new benefits and costs side by side.
Appraisal
A full FHA appraisal determines your current home value and affects the new principal limit.
Underwriting and Approval
HUD’s 5 times benefit test must be met unless adding a spouse or lowering interest costs substantially.
Closing and Funding
Your prior loan is paid off. Additional proceeds become available as a lump sum disbursement, line of credit, or monthly payment options, such as a term or tenure.

Your ownership does not change. You continue to own the home, just as you did with your original reverse mortgage.

Want a refresher on how each payout option works? Many homeowners choose a refinance to take advantage of the line of credit growth feature, which increases available funds over time.

HUD’s 5 Times Benefit Rule Explained

HUD requires that:

You receive at least 10 percent of the new principal limit in additional proceeds
Your net proceeds are at least 5 times the total refinance costs

Example:
If your total refinance costs are $10,000, you must receive at least $50,000 in additional proceeds.

This is designed to protect borrowers from refinances that offer little benefit.

Exceptions apply if you are:

Adding a borrowing or an eligible non-borrowing spouse
Significantly reducing interest accrual
Refinancing within five years of your first FHA reverse mortgage while meeting HUD’s 2025 waiver conditions

Expert Insight from Michael Branson, CEO: “HUD added the 5 times benefit test to protect homeowners. If the refinance does not clearly improve your situation, the loan should not be done. It is a simple guardrail that ensures you only move forward when the benefit outweighs any new costs.”

Updated MIP Credits for Refinances

Refinances are eligible for credits toward the Up-Front Mortgage Insurance Premium (UFMIP) previously paid. On your first refinance, much of the original 2% UFMIP is credited, often reducing or eliminating new charges. Subsequent refinances only receive credit from the most recent loan, so later refinances may involve higher MIP out-of-pocket.

HUD also requires lenders to provide you with a HUD-92901 Anti-Churning Disclosure within three business days of your application, so you can clearly see your new costs and benefits.

Expert Insight from Michael Branson, CEO: “Most borrowers are relieved to hear they are not charged the full upfront mortgage insurance premium again. HUD only requires you to finance the difference between what you originally paid and the standard two percent on the new HECM, which often brings the cost down considerably.”

Key 2025 HUD Rule Changes

HUD updated Handbook 4000.1 in August 2025. Here is what changed and why it matters.

Limitations on When Counseling Can Be Waived

You may waive new counseling only if all of the following are true:

The refinance occurs within five years of your first FHA reverse mortgage
You completed HUD counseling for that first loan
You meet the full 5 times benefit test
You sign the HUD Anti-Churning Disclosure

If any condition is missing, new counseling is required.

Five-Year Lookback Rule Clarified

The lookback is tied to your first FHA reverse mortgage, not any later refinance.

Rules for Surviving Spouses

If the original borrower has passed away and you were not listed as an eligible non-borrowing spouse:

The surviving spouse cannot use the existing loan
The spouse must qualify for a new reverse mortgage instead

Did You Know? If a spouse is not on the current loan or was not considered an eligible non-borrowing spouse at the time you took the loan, refinancing must be completed for the protections to apply. This is one of the most common reasons couples consider refinancing.

Your available proceeds depend on a combination of age, interest rates, and today’s lending limits. These current refinance rates show what most homeowners are qualifying for in 2026.

HECM Reverse Mortgage Refinance Rates

Fixed Rate	Adjustable Rate	2026 Lending Limit
7.680% (9.191%e APR)	5.500% (1.750 Margin)	$1,249,125
7.810% (9.339%e APR)	5.750% (2.000 Margin)	$1,249,125

HECM Adjustable Rate options are rounded to the nearest 1/8th

HECM Refinance Rates Effective 5/5/26

Jumbo Reverse Mortgage Refinance Rates

Fixed Rate	Adjustable Rate	Lending Limit
7.990% (8.069%e APR)	9.425% (5.625 Margin)	$4,000,000
8.950% (8.957%e APR)		$4,000,000
8.980% (9.134%e APR)		$4,000,000
8.990% (9.218%e APR)		$4,000,000

Jumbo Refinance Rates Effective 5/19/26

Summary Table: When a Reverse Mortgage Refinance Makes Sense

Reason	What It Means for You
Home Value Has Increased	You may qualify for a higher loan amount
Older Lending Limits Were Used	Updating to the 2026 HECM limit of $1,249,125 can unlock more proceeds
Adding Younger Spouse	Protects their long-term ability to stay in the home
Lower Rates or Margins	Reduces interest accumulation and can increase credit line growth
Loan Contains Servicing Fees	A refinance can remove monthly servicing charges
Switching to Jumbo Product	Helps homeowners with high-value properties access more funds
Meeting HUD 5 Times Rule	Required for benefit eligibility
Protecting Non Borrowing Spouse	Helps secure their occupancy and access rights

In-Depth FAQ

Can you refinance if you have a reverse mortgage?

Yes. Reverse mortgages may be refinanced if the new loan provides a tangible benefit — usually passing the “proceeds test” and “5-times cost test” or adding a new spouse.

What are the HECM-to-HECM refinance guidelines?

Your loan must be at least 18 months old and pass HUD’s benefit tests (or add a spouse) to qualify for a refinance.

What are the closing costs or fees?

Expect appraisal, title, escrow, and origination fees. Most borrowers won’t pay a full new MIP due to credits from the first loan.

Can you refinance a reverse mortgage into a conventional loan?

Yes. Reverse mortgages carry no prepayment penalty. You can switch into a conventional loan, HELOC, or other product if it fits your goals.

Can you take out a second reverse mortgage?

No. The usual way to access more funds is refinancing into a new HECM or jumbo reverse mortgage.

What’s the difference between a refinance and a reverse mortgage?

A refinance of a forward mortgage is used to lower interest or take cash out. A reverse mortgage is designed for homeowners 62+ to eliminate monthly payments and convert equity into tax-free cash.

What is the 5-times rule for reverse mortgages?

The refinance must net at least 5 times the loan costs in new proceeds, plus at least 5% of the new principal limit as available cash. Example: $5,000 in costs requires $25,000 more in proceeds.

Am I required to stay with my current lender?

No. You’re free to refinance with any HUD-approved reverse mortgage lender.

Can a jumbo reverse mortgage refinance a HECM loan?

Yes. Jumbo reverse mortgages can be used to refinance existing HECM loans, often providing more proceeds on higher-value homes.

Can I be added to my parent’s reverse mortgage at age 62?

No, you cannot be added to an existing reverse mortgage. However, your parents can refinance and add you as a co-borrower now that you’re 62.

How long after my initial reverse mortgage can I refinance?

HUD requires an 18-month seasoning period before refinancing, ensuring tangible borrower benefit.

Is an appraisal required?

Yes. Refinances require a full appraisal (interior and exterior) plus a financial assessment.

Can I add a sibling without refinancing?

No. Once closed, no new borrowers can be added. A refinance would be required.

Will overdue property taxes be paid off if I refinance?

Yes, but outstanding taxes must be paid at closing, and HUD may require a Life Expectancy Set-Aside (LESA) for future taxes/insurance.

Will I need to complete the same paperwork again?

Yes. Refinancing is a new loan, requiring full documentation. Some older loans will also need new income/credit documentation.

Can I do a reverse mortgage if I recently refinanced my home?

If you did not take cash out, you can apply immediately. If you took cash out, HUD requires a 12-month wait before replacing that loan with a reverse mortgage.

If I live with someone else, can I refinance without their involvement?

Yes. Only spouses or owners on title are relevant. Other occupants do not affect refinancing.

Considering a Reverse Mortgage Refinance? At All Reverse Mortgage, Inc. (ARLO™), we specialize in HECM-to-HECM and jumbo reverse mortgage refinances that truly benefit borrowers. Whether you want to add a spouse, access more funds, or reduce interest costs, we’ll help you review your current loan. Call (800) 565-1722 or try our reverse mortgage refinance calculator today.

Also See: Reverse Mortgage Refinance Q&A

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Post your question in the comments below and anticipate a personalized response from Mr. Branson himself, typically within one business day. He's here to illuminate all angles of reverse mortgages, ensuring you're equipped with the knowledge to make informed decisions. Take this opportunity to gain insights from a seasoned professional.

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68 Comments on this Article

John
April 30th, 2026

When a HECM loan is exhausted can you convert to a jumbo loan against the remaining equity?
Reply to John
- Michael Branson
  April 30th, 2026
  
  Hi John,
  You can refinance a reverse mortgage any time you wish without incurring a prepayment penalty. You would of course be required to qualify for any new loan program based on that program's requirements but yes, that would also include jumbo or proprietary reverse mortgage loans as well.
  Reply to Michael
Helen G.
March 26th, 2026

At what point can your reverse mortgage be refinanced?
Reply to Helen
- Michael Branson
  March 26th, 2026
  
  Hello Helen,
  There are a few requirements for refinancing a reverse mortgage with another reverse mortgage, known as a HECM to HECM refinance (if you are refinancing your reverse mortgage with conventional financing, there is no limitation on when you can refinance the loan). HUD wants to ensure that the new loan is beneficial to the borrower and not merely the result of loan flipping by requiring a benefits test. Excessive refinancing without a definite benefit borrowers typically only benefits the originator and tends to strip the equity in the property. The National Reverse Mortgage Lenders Association and lenders have added a time element of 12 months to ensure senior borrowers are not targeted for early refinances as well.
  Basically, the new loan must give the borrower a five times benefit when considering the funds made available to them based on the cost to get the loan and at least 5% more with the new principal limit, and should not be less than 12 months since the last loan closed. There are exceptions that can be made when it makes sense for the borrower but those must be considered on a case by case basis. If it has been longer than 12 months since you closed your loan and because of significant appreciation you could benefit from a loan at today's program parameters, a refinance may be a great option for you (the maximum principal limits are higher now and perhaps you home was valued higher than the maximum in 2023 and it's gone up in value even more since then, etc.).
  Reply to Michael
Alan W.
December 12th, 2025

Existing reverse mortgage homeowner here. Is the HUD Up-front Mortgage Insurance Premium (UFMIP) waived for a one-time refinance, or is it waived for all future refinances?
Second, what is considered a good low margin rate on a HECM maximum principal limit loan (line of credit) for a property valued at $1.8 million? Is there a minimum margin allowed?
Reply to Alan
- Michael Branson
  December 12th, 2025
  
  Hello Alan,
  HUD never waives the UFMIP (Up-front Mortgage Insurance Premium). However, HUD does provide a credit for the amount of UFMIP you paid on your previous reverse mortgage, assuming your prior loan did not result in a claim being paid by HUD.
  For most first-time refinances, this means the borrower is refinancing into a larger loan. The lender calculates the difference between the UFMIP paid on the previous loan and the UFMIP required on the new loan. The borrower is only charged that difference.
  Here is a simplified example. If you paid $10,000 in UFMIP on your original loan, and the UFMIP on your refinance would normally be $14,000 due to a higher home value or loan amount, you would only be charged $4,000 on the refinance. You receive a $10,000 credit for the UFMIP already paid.
  If you refinance a second time, HUD only considers the most recent transaction when determining the credit. For example, if your home increases in value again and you refinance in five years, and the UFMIP would be $18,000 at that time, your credit would be limited to what you paid on the most recent loan, which in this example would be $4,000.
  Regarding margins, margins are driven by the secondary market and the value of the loans. There are times when a 1.75% margin is very competitive. In other market conditions, margins may be lower or higher. Because margins can change quickly, I would hesitate to quote a specific margin, as it could change before this response is even posted. Rates and margins are always subject to change without notice.
  That is why we encourage borrowers to obtain proposals from more than one lender.
  We also encourage borrowers to contact us directly for refinance scenarios rather than relying solely on a website quote. Refinances are more complex because credits for previously paid mortgage insurance and other costs can vary depending on prior transactions. Without reviewing that history, an online quote could appear higher or lower than the borrower's actual costs. Once you have proposals, compare them carefully.
  HUD does not set a minimum margin. However, HECM loans are typically sold into GNMA securities, and lenders must price loans based on market demand. That demand changes with market conditions.
  We do not expect borrowers to receive a single proposal and make a decision. We welcome comparison shopping. If any lender pressures you not to compare offers, that should be a red flag. We also encourage borrowers to visit the Better Business Bureau website and read reviews from homeowners who have closed loans with us. We take care of our customers, and our ratings reflect that.
  Reply to Michael
Tina
November 14th, 2025

Hi, we are deciding to refinance our home to eliminate our first and second mortgages. However, we would also like to do a reverse mortgage afterward. What is the process for this?
Reply to Tina
- Michael Branson
  November 14th, 2025
  
  Hi Tina,
  If you plan on doing both a refinance and a reverse mortgage, you may be better off simply completing the reverse mortgage and skipping the extra loan. Depending on the type of refinance you choose and whether you take out any equity, you could trigger a waiting period before you're allowed to pay that loan off with a reverse mortgage. And why incur the cost of a second transaction if you don't need to?
  I strongly recommend getting a reverse mortgage proposal before moving forward with a refinance. You may save yourself time and money if you ultimately plan to get the reverse mortgage anyway. You can get an estimate with real-time costs - without any obligation - on here. You won't need to provide any personal information beyond a birth date, your home's ZIP code, and an approximate value. If you want us to do more, we will. If you prefer not to move forward, there's no cost or obligation.
  If you'd like us to review your numbers, feel free to reach out anytime.
  Reply to Michael
David
December 13th, 2024

What does it mean when the lender says, "You can't refinance the loan; there is not enough benefit to allow us to do this. The rates are much higher now"? This seems oddly stated, or is it? Reverse mortgage for a 91-year-old widow with a California property valued at approximately $1,250,000 and a $153,000 mortgage - isn't that enough equity?
Reply to David
- Michael Branson
  December 13th, 2024
  
  Hello David,
  HUD will not allow lenders to refinance a reverse mortgage with a new reverse mortgage unless the borrower receives at least five times the cost of the new loan in benefits from the refinance. The reason for this is that some originators in the past repeatedly refinanced loans that primarily benefited the originator, not the borrower. The originators earned fees each time a new loan closed, but in many cases, the borrower's equity was eroded without receiving meaningful benefits.
  Borrowers typically receive more money with lower interest rates and less when rates are higher. Since interest rates are currently high, borrowers receive less money through refinancing, which often fails to meet HUD's required benefit threshold for approval. HUD does allow exceptions in cases of hardship, but if there are significant unused funds remaining in your account, there is unlikely to be a case for such exceptions.
  HUD's maximum lending limit is lower than your property's value. Even if your home's value has increased, the loan amount is based on the lesser of the home value or the maximum lending limit. For 2024, the HUD lending limit is $1,149,825. Since your property is valued at $1,250,000, you have already received the maximum amount allowed for your loan.
  Additionally, with an outstanding balance of $153,000, you likely have a substantial amount of unused funds - possibly over $300,000 - still available on your existing line of credit. This line of credit grows annually, providing you with additional funds over time. Given this, it's unclear why refinancing would be necessary when you already have access to considerable resources on your current loan.
  Looking ahead, there could be good news. HUD may announce an increase in its lending limit soon, which would benefit borrowers with higher-value homes like yours. Additionally, while the Federal Reserve has begun lowering interest rates, these reductions have not yet translated into lower mortgage rates. If this trend continues, lower mortgage rates may become available in 2025 or 2026.
  For borrowers with substantial available balances on their current loans, the growth of the line of credit and lower interest accruals on adjustable-rate loans might make refinancing less attractive. You should evaluate the situation at that time to see if you meet the benefit requirements and whether refinancing costs are justified by the potential gains. Otherwise, the increases in your current loan's available funds might make refinancing unnecessary.
  Reply to Michael
Frank B.
September 25th, 2024

Hello,
I have a reverse mortgage with approximately $48,500 of unused credit. Does having too much unused credit disqualify you from refinancing the reverse mortgage?
Reply to Frank
- Michael Branson
  September 29th, 2024
  
  Hello Frank,
  No, having unused credit does not disqualify you from refinancing. However, it's important to keep in mind that lenders must evaluate the benefit a new loan would provide before approving a refinance of an existing reverse mortgage. If you still have available credit on your current loan, that amount does not count as a benefit of the new loan because those funds are already available to you under the existing loan.
  The proceeds from the new loan, minus the unused funds from your current loan, must meet the benefit requirements for refinancing. Essentially, any funds that are simply transferred from the old loan to the new one do not count as a benefit. This rule is in place to protect borrowers from predatory lending practices, where a lender might refinance a loan without providing significant financial benefits to the borrower.
  Reply to Michael
  - Frank B
    October 2nd, 2024
    
    Thank You very much. Your answer is understood and very much appreciated.
    Reply to Frank
Eugenia
August 9th, 2024

Hi again, Michael,
I feel bad to be sending another question, but I am so confused and can't afford to pay a lawyer versed in refinancing a reverse mortgage, so I am hoping you will help me again. The calculator estimated a payout of $7,487 with a $0 line of credit ever. Another (HUD-referred in my state) said the principal did not support any cash out, and apparently, if it did, the "settlement" costs were almost $15,000! Another company (the one I mentioned in the first message) still wants to move forward, saying they will absorb the appraisal and any other closing costs, and I will receive at least (maybe a bit more) $20,000 with a $5,000 line of credit. They are from Boynton Beach, FL, and want to move ahead, so you can see why I am confused. I am sorry this is so long, but I am getting more nervous by the hour and don't understand why they are so interested. Please help me if you can. Thank you.
Reply to Eugenia
- Michael Branson
  August 14th, 2024
  
  Hello Eugenia,
  The calculators are great for first time loans and purchases, but unfortunately they are not perfect when refinancing an existing reverse mortgage loan due to the way HUD handles the up-front mortgage insurance premium. HUD gives borrowers credits for premiums paid on the last reverse mortgage they closed, as long as there were no defaults on that loan.
  If this is the first time you are refinancing an existing HUD HECM reverse mortgage, there will be large credits for mortgage insurance premiums paid on the last loan that the calculator cannot account for. This can make a significant difference between the costs and money available from standard calculator results and what you would actually receive on a refinance if you speak directly to the lender. I can only assume from your comments that the first company is considering the HUD credits for costs paid, but you're looking at standard calculator results that do not take this into consideration. If this is your first time refinancing your reverse mortgage, you are not comparing apples to apples.
  Secondly, interest rates have recently decreased, which could significantly increase the amount of money you receive. Your Principal Limit is, among other factors, dependent on interest rates, and the improved rates should also benefit you. Anyone who received a quote in the past several months should consider checking again.
  Finally, when considering refinancing an existing reverse mortgage, get more proposals and not just calculator results. Contact at least three BBB highly-rated lenders and request written quotes from them. Unlike first-time loans, where minimal information is needed to determine your numbers, lenders can't give you a valid proposal on a refinance of an existing reverse mortgage unless they have a copy of your current statement and know your case number to look up the HUD information and see what fee credits you are eligible for. We would be happy to send you a written proposal, and other lenders should do the same. If they refuse or try to pressure you into taking their loan without allowing you to compare, run - don't walk - away from that originator! You should never experience high pressure from a lender or originator trying to "sell" you a reverse mortgage. When I hear of such a vast difference in numbers as you have outlined, but I can't review the actual proposal, I can't determine the cause of the discrepancy. However, I can usually find the explanation when both proposals are available. Sometimes one lender offers a better deal than another, but that's too large of a difference to be attributed solely to rates and fees. Often, it comes down to one lender using a much higher value for the home, making it look better, but the numbers are worse when the same value is applied. The amount any borrower will receive depends on the appraisal, so all proposals should be based on the same value for a proper comparison. You should be given the opportunity to compare all proposals and make an informed decision about which loan is best or even if the loan is right for you. But you need all the information to make that comparison.
  Reply to Michael
Carolyn D.
August 6th, 2024

I have a reverse mortgage. Can I get $30,000 more out of the same loan without getting refinancing into a new loan?
Reply to Carolyn
- Michael Branson
  August 6th, 2024
  
  Hi Carolyn,
  If you still have remaining unused funds in your line of credit, you can continue to use them until they are exhausted without having to get a new loan. If you are at the maximum your current loan will lend, you would need to apply for and qualify for a refinance at the higher limit in order to receive additional money.
  The good news is that if you have not previously refinanced, all or a portion of the initial mortgage insurance premium you paid on your first loan will be credited to the next loan, and the costs will be substantially lower than your first loan. The only way to know if the loan works for you as a refinance is to get the numbers and compare.
  Reply to Michael
Mary D.
August 2nd, 2024

Hello,
I have had my HECM reverse since 2013 and was not able to get any cash at the time but grateful for the loan. Now, the property has increased to 4X the amount of the original loan, and I was contacted by another reverse company wanting me to refinance and give me $20,000. I am very strapped for cash at 81 years old - should I do this? They say it is a HECM loan, lower interest, etc. Thank you so much, sir.
Reply to Mary
- Michael Branson
  August 6th, 2024
  
  Hello Mary,
  It may be a good deal, but the only way to know for sure is to shop around and compare. Go to our hecm refinance calculator and compare the numbers. You will need to know how much you owe on your current loan and a little bit of other information about the current loan so that you can really compare the actual loans.
  You may be able to get even more money, but you won't know for sure unless you take just a couple of minutes to compare. There is no cost and no pressure. It's worth a look!
  Reply to Michael
  - Mary D.
    August 6th, 2024
    
    Thank you so much for your reply, Michael. I am going to try the calculator out - I hope I am up to the task. It would be wonderful to have some money available!
    Reply to Mary
William
August 7th, 2022

Arlo, My 93 year old father-in-law recently refinanced his HECM loan. Technically he met the HUD requirements to qualify for refinance. His increase in the borrowing limit was $25,000. What he didn't realize was that the lender added a set aside (against his borrowing limit) of $37,000 to pay future taxes and homeowner insurance. So, the actual amount he can access has decreased by $12,000. Not to mention a cost of over $4000 to get this "increase" in the borrowing limit. Can this be undone?
Reply to William
- Michael Branson
  August 20th, 2022
  
  Hello William,
  
  If you had not closed the new loan yet, you could certainly cancel at any time before the new loan closed and recorded. The lender is required to disclose the final figures multiple times as well as at documents with a right to rescind if the borrower does not like the terms. Once the loan has closed though and the old loan is paid off and a new loan is recorded against the property, I am not aware of any way to put the old loan back on the property at that point. I once heard it described as "unflushing a toilet", it can't be done because once the old loan is gone, it's gone. But you do still have options and possibly benefits you may not yet be considering.
  
  You can always pay the loan off. You could do so with another loan program or with other funds if the family wanted to fund a private reverse mortgage for the owner. This may not be something that the family is prepared to do or even able to do but there is no prepayment penalty, and it is an option. Another thing that you may want to consider is whether the LESA (the set aside to pay taxes and insurance) is really an actual benefit for him. He may not have access to those funds, but now he will not need to pay taxes or insurance for as long as he lives in the home. I do not know the reason he was required to get the LESA, but it is possible he was having a hard time paying the taxes and/or the insurance or paying them on time. Failure to pay taxes and insurance in a timely manner is a default on reverse mortgages and if that was an issue, he might have found himself in default at some point without the LESA.
  
  There are also other benefits do the LESA account. Your father-in-law no longer has to pay the taxes and insurance on the property and so that money has been freed up for him to use on other expenses. It is set aside so it is not considered borrowed until the lender sends it to the tax assessor or the insurance company to pay the charge and therefore, it accrues no interest until it is used to make a payment on his behalf. And should your father-in-law move or otherwise decide to repay the loan before all the set aside funds have been used, that money was never used and therefore, not lonely did it accrue no interest, but it does not need to be paid back. You said that the set aside was for $37,000 and that money will only need to be repaid if your father-in-law uses the funds to pay taxes or insurance while living in the home and if that happens, then it will be $37,000 he will not be required to pull out of his pocket to pay at that time.
  
  I do realize that this may not be the answer or resolution that you were hoping for and I think that if the company who closed the loan for your father in law did not go way above and beyond to explain this all to your father in law at the time, before they closed the loan, they did do him a disservice but the set aside in and of itself is not necessarily a terrible thing. Yes, he has $12,000 less available now than he did before but depending on how much his annual taxes and insurance are that might even out in a relatively short time, he no longer must be concerned with setting funds aside to pay taxes or insurance and if he was getting behind on his taxes and/or insurance, it may have also saved him from a future default that could have been much worse.
  Reply to Michael
Marla
December 19th, 2021

Hello Arlo,
My dad received $500,000 lump from a reverse mortgage at 5.76% He now regrets it as he didn't need the full $500,000 and he has it in his bank account. He had planned to do something with the full amount but decided against it.
He can pay $200,000 toward the $500,000 owed, and wanted to refinance his home in a conventional loan for the remainder ($300,000 plus all the interest he owes). He can afford the monthly mortgage payment.
He's 84 years old, can he get a conventional mortgage?
What would be a better course of action for him? What type of professional can I ask run numbers, factor in fees and interest to help evaluate what is best, stay in it or refinance? (but who are impartial)
Also his home was appraised at $1,300,000 for the reverse mortgage 2 years ago. But this was about $300,000 too high. Homes larger, remodeled, with better views, larger lots and within 5 blocks of his home sell for around $1,400,000 to $1,600,000. But his home is small, dated, on a small lot, no view and these seem to sell for $1,000,000. Why would the reverse mortgage over-value his home? Do they need to meet some sort of ratio?
Reply to Marla
- Michael Branson
  December 19th, 2021
  
  Hello Marla,
  
  Let's talk about the appraisal process first. Under appraisal independence laws, the originator cannot even choose the appraiser nor can they suggest a value. Most of the time, borrowers accuse lenders of "low-balling" their values and the lender have no control over the process either way. A licensed, independent appraiser determined the value on their own based on the sales information he/she had available to them at the time.
  
  With regard to the refinance, your dad can pay off the loan with cash or a refinance at any time without penalty. Since he is getting a lower loan amount, he could also look into a HUD HECM reverse mortgage at much lower interest rates and take a line of credit that he could use just the amount needed to pay off the existing balance and leave the remaining on the line unused on which he does not accrue interest.
  This would mean he has funds available to him if he needs them later if he needed them or he could choose to never use them, it would be his choice. And if he wanted to, he can make a payment of any amount at any time on that loan as well to repay the balance or to keep the balance from rising but he would not be required to so if he was ever in a position where making a payment was not possible or comfortable, it would not adversely affect him.
  
  And of course, he can always approach any forward lender (at 84 he can still get any loan he chooses as long as he qualifies for the financing) for a standard refinance loan. The upside for such a transaction is that the fees are typically lower but then the qualification is tougher and he has regular payments that he must make or he risks credit and other implications if the payment is ever missed or late. As far as who he should speak with, there are literally hundreds of forward or traditional lenders and you can check with his bank or credit union (if he belongs to one) or do a quick internet search to find one that offers a program that is right for him if that is the way you choose to proceed.
  
  As far as which is better for him, only you folks can make that determination. Take a look at both options and see which better suits his needs and abilities. If the forward loan puts any pressure on his finances or his cash flow, I would strongly suggest that you consider the HUD HECM reverse mortgage line of credit option. If he has more than adequate income and there is no problem and you do not feel there ever would be with his cash flow paying on a forward loan, you may want to consider that loan.
  Before you discount the reverse mortgage though, I would also recommend that you check to see what lender credit options are available to help pay the costs as you may be able to bring those down substantially.
  Reply to Michael
Dianna R.
August 31st, 2021

Hi ARLO, We did a reverse mortgage in 2017, Our appraisal on house was $625,000. We got a line of credit of 53,000. Over the first 2 years, we took money in the amount of $32,000. to remove roofs on house & put a new roof on, plus a new garage roof. We had a new covered patio built-in back of the house. New water heater, new 7' white Vinyl fence, all new wood floors throughout the house, new water heater & padding & carpeting in 3 bedrooms, the whole house outside was painted, all new screens, New Fascia boards, did some landscaping. and we live on a canyon lot. In February 2021 we did a refinance and they did a drive by appraisal, took a picture of the front of house and appraised it at $645,000. In our area code of 92123 in California, the homes are selling for in the mid $700,000. I had a couple of real estate people come here, one that lives 3 blocks away and every one of the said canyon lots house in this area with no updates (as house were built in 1958) are selling between $739,000. no updates and with the things you did in the last 3 years, plus have RV parking, and the 2nd largest lot on the block we could park 15+ cars in our back yard. that's how big it is, and it got the biggest view as our property we own park of Ruffin Canyon down to the first trail, with an 80 ft Torrey Pine in canyon between the 8' chain link fence with gate. 1246 sq. foot house. we only got $3,000 line of credit. The Lender said we would get 24,000 line of Credit but she estimated the appraisal at $675,000. The drive by appraised it at $645,000. Is there a way we can get money from equity in house, as we owe $352,000 to take out 2 closets in living room and a small wall taken and enclosed our Patio? Any suggestions? Thanks Dianna
Reply to Dianna
- Michael Branson
  September 9th, 2021
  
  Hello Dianna,
  
  If you did not close that loan, you can always apply again now. The drive by appraisals are no longer available and the current appraisal would consider your home's current condition as well as all the current sales in the neighborhood.
  If there are sales to support mid-$700,000's, that would be the value the new loan would be considered using and the appraisal in February would not even be considered any longer. An appraisal is only valid for 120 days and then it is expired.
  If you did close that loan. You would need to wait a little longer to have the loan refinanced again and it may not work as well for you a second time since HUD now does not credit your initial mortgage insurance premium paid on the first loan on subsequent refinances.
  Therefore, it is a good reason for borrowers to be sure of their timing for a refinance and not jump into a refinance prematurely before the new loan is a clear benefit to their circumstances. Before you do anything (even if you did not complete the refinance in February), it is always wise to check closed sales to be sure that there are recent sales of similar homes that have closed in the last 6 months that will support your needed value.
  Real estate agents are usually very positive and tend to consider what they believe a home would sell for and not necessarily what the appraised value is liable to indicate based on the analysis of closed sales of similar properties.
  They may very well be correct in what they believe the home could sell for, but an appraiser must estimate a value and support it based on actual closed sales and if there are no closed sales to support their opinion of value, HUD will not allow an appraiser to use lower sales and then adjust upward for what he/she believes would happen if the closed data does not support that conclusion.
  Reply to Michael
Debbie C.
August 24th, 2021

I have a reverse mortgage from 2017 with a balance of $290K. The current value of my home is $680K-$730K Is it wise to refinance the mortgage? I don't need any money from it, but I'd like to get the MIP lowered. Any suggestions?
Reply to Debbie
- Michael Branson
  August 24th, 2021
  
  Hello Debbie,
  
  To refinance or not is a decision that everyone must make based on their own circumstances. Needing more money now is often not the only reason to consider a refinance and I would love to point out some of the things you may want to consider.
  
  Firstly, all HUD/FHA reverse mortgage loans will have mortgage insurance so refinancing will not change that fact. You will not lower the MIP so if that is your sole motivation, I would tell you not to consider it. However, you may be able to do more positive things and not raise the MIP cost at all which might save you money in the long run as well.
  For example, you do not need to pay the Up-Front MIP cost you already paid so if your home has increased in value, there is a good chance you can get a lender credit so that the lender will pay the increased MIP on your behalf.
  You do not accrue interest on any funds you do not borrow, but if you have additional funds available because of a refinance, those funds in the line of credit will grow on the unused portion that will give you greater access to funds later if you do need them. If you never borrow them, they do not accrue interest so there was no additional interest cost.
  
  Next, I do not know what your interest rate on your current loan is but you may be able to improve your overall interest situation for your rate and margin. I believe your loan was already originated when the MIP renewal had been lowered back to 1.25% so there would be no difference from today's renewal rate of .50% from the .50% renewal rate you probably have now.
  I would encourage people to look at their statements or their loan documents though and if they have the higher 1.25% renewal rate, then it might really benefit them to refinance to take advantage of to lower MIP renewal. That is saving .75% if you have the higher renewal MIP and on a balance like yours, that would be about $2,175 in the first year alone and as the balance increases and over many years, that would be a substantial savings.
  
  Finally, be sure to shop around. You may be able to find a lender willing to offer to pay some or all of your costs on a refinance transaction that make the loan extremely affordable or would add very little if anything to your existing balance. It doesn't hurt to find out and you may not need the money now, but it might be nice to have it available in case of any unforeseen circumstances later (especially if the availability of additional funds saves you money to procure).
  If you would like to see what you might be able to have added to your line of credit, you can get a no-cost and no obligation proposal at our HECM refinance calculator to see if the numbers work for you.
  Reply to Michael
Carol S.
July 24th, 2021

I have a reverse mortgage (18 months old) and want to refinance. I was told that I can't since my son lives with me. Is this true? I know he can live with me now, but to qualify for new loan he cannot be a resident.
Reply to Carol
- Michael Branson
  July 24th, 2021
  
  Hello Carol,
  
  That is not factual, and I would encourage you to speak to a lender about your circumstances. I don't know if perhaps your qualifications are so tight that an additional member of the household that you must support means that you do not qualify under the HUD residual income method for a 2-family household but if your son is working and has enough income to support himself, that would not be an issue.
  Also, if your income is sufficient to qualify under a 2-person household, that still is not an issue. If the problem is that your income will not support the HUD requirements for 2 persons in the family, that's a whole different issue but there is no prohibition about having your son live in the home.
  Reply to Michael
Shirley M.
July 19th, 2021

I keep getting refinance letters. I'm with novad and owe $310,000 and house might sell for $335,000. Why would they think refinancing is a good idea?
Reply to Shirley
- Michael Branson
  July 19th, 2021
  
  Hello Shirley,
  
  When advertisers determine to whom they are going to send their mailers, they determine the best way to spend their advertising dollars by trying to select the best recipients of their mailers.
  Some go to great lengths to determine ages, property values, loan balances on existing loans, etc. while others just look at the type of loan on the property and the date the other loan was closed and send out their mailers accordingly.
  If your loan is being serviced with NOVAD, it is probably an older loan and therefore, the loan could be underwater, but it could also be a very low loan to value if your property has increased in value and/or your loan was originated at a time when HUD had lower maximum lending limits in your area (or a combination of both).
  Lenders who live off refinance of existing loans, whether it be on forward or the reverse loans, will often flood the market with flyers in the hopes that enough of them reach borrowers who are willing and able to refinance that it makes their costs worthwhile.
  They don't know how much you owe when they send the mailers out, they are just blanketing an area and hoping. Since you are aware of your circumstances, you can just toss them into a trash can when you receive them and not think twice about it.
  Reply to Michael
Rose
May 24th, 2021

Hi Arlo, We are 67 older in September, and 78 older in August. We are considering to refinance our current reverse mortgage originated in 2018 at no cost except for the counseling. We are currently on a fixed rate of 3.99% for life with a loan balance of $372,945.92 and valued $1,090,000 under the HUD old limit of 850K. Currently we don't need extra money. Do you think switching from fixed rate to adjustable would be a good option for us? Our offer for fixed is 3.06% and a lender's margin of 1.625% with 5% cap. Appreciate your advice.
Reply to Rose
- Michael Branson
  May 24th, 2021
  
  Hi Rose,
  
  There are a couple of reasons when it would make sense to refinance. One is for access to greater funds that are needed or possibly needed in the future and two is for a better rate/financing scenario.
  No one can ever predict what rates will do in the future and if you are asking will an adjustable-rate loan increase in rate in the future I would have to guess that yes, rates will rise at some point, but the question is when and by how much. They have been down for so long that most reverse mortgage borrowers today have done very well with the adjustable-rate loans and eventually it is not unreasonable to expect them to go up.
  If you are only looking to refinance for a lower adjustable rate at this time and that rate is not much below the fixed, I would not advise it. However, if you can also opt for a 3.06% fixed rate at no cost and save nearly 1% per year, that might be a very good option for you.
  If you take out additional cash with the fixed rate option that you do not want or need because it is a full draw only option, you can make a principal reduction payment later if you wish. The good thing about the adjustable-rate line of credit is that you are not required to take a draw if you do not want the money now.
  
  If your motivation is not so much just the rate reduction but also the availability of additional cash in the line of credit that you may not need now but will have available to you if you do need it later, then a no cost refinance now on the line of credit might be a good option for you with the adjustable-rate program. But only you can decide if the possibility of a rate increase on the adjustable rate is less important to you than the availability of future funds and therefore the line of credit makes more sense.
  The general feeling is that we are heading into inflation and that rates will rise but no one really knows when or how much so only you can decide if having the additional funds or the lower interest rate is more important to achieving your goals. I wish I could tell you what rates will do and if they do go up, when and by how much but after 45 years in the mortgage banking industry, the only thing I can tell you for sure is that they will go up, or go down, or stay the same!
  My crystal ball broke years ago and I would never try to tell you that I can time the market with rate changes because so many things can happen that affect the global market and interest rates. You need to make the best decision possible for your circumstances based on the information currently available. I really wish I had more definitive guidance for you on that but that is the best, most honest information I can give you.
  Reply to Michael
Dave
November 2nd, 2020

Can I refinance now at a lower rate at the age of 60, and still be eligible to do a reverse mortgage when I turn 62?
Reply to Dave
- Michael Branson
  November 2nd, 2020
  
  Hi Dave,
  
  Yes, you can refinance now and even take case out if that is your desire and it will not affect your ability to get the reverse mortgage two years later -as far as the rules are concerned.
  HUD requires a 12-month seasoning to pay off loans used for cash out with a reverse mortgage so as long as the loan is seasoned over 12 months, you would be fine in that regard.
  The one thing I would caution you about is that you want to be sure you do not borrow so much that it might make getting the reverse mortgage harder considering the maximum percentage for a 62 year old borrower at the lowest rate is currently just under 53% of the property value.
  This percentage is not fixed and can increase if HUD changes the programs parameters but is most likely to decrease in the next two years if interest rates rise during that time.
  Reply to Michael
Kandy
June 29th, 2020

My parents are refinancing their reverse mortgage, why would the mortgage company want them to do a power of attorney?
Reply to Kandy
- Michael Branson
  June 29th, 2020
  
  Hello Kandy,
  There is no reason for a lender to "want" a borrower to execute a Power of Attorney (POA). In fact, the HUD rules for accepting and using a POA are strict and from a lender's perspective, it is easier to originate a loan that does not require its use.
  Having said that, there may be specific reasons in this instance of which I am not aware, that I cannot consider and on which I cannot comment.
  Typically, though when using a POA it is only after the POA was completed at a previous date when the borrowers both had full competency and the borrower(s) require assistance to close the loan now.
  If both borrowers are fully capable now and could execute the POA, they could also execute the loan application and the loan documents and therefore a POA would not be required.
  If one of the borrowers now lacks competency, it is also too late to grant POA and so I cannot comment on why this is arising in your parents' transaction. Have you asked them?
  Reply to Michael
Paul S.
March 30th, 2020

Hello Arlo - I am trying to help a close friend who is wondering if an existing reverse mortgage can be refinanced to increase cash flow to her elderly parents. My friend is the successor trustee of her parent's trust. Her parents own their home (in their trust) which is worth $1.6 million and has a reverse mortgage in place with a balance of about $500,000. My friend's mother has Alzheimer's and her father health is declining such that he is no longer competent to sign new loan docs. The question: can a successor trustee initiate a refinance in this situation, and would such a refinance generate additional resources to help care for her parents, who want to remain in their home? Thank you!
Reply to Paul
- Michael Branson
  March 30th, 2020
  
  Hello Paul,
  
  They sound like they would be candidates for the new Jumbo products that are available. The loan that they probably have now is the HUD HECM loan that limited homeowners to the HUD maximum loan amount whereas the jumbo or proprietary programs will accommodate much higher valued homes.
  
  The question of whether someone else can sign for dad would depend on how their legal documents are written prior to dad's incapacitation and if there is a power of attorney (POA) that authorizes mom or the daughter to act on dad's behalf. If not, they can seek professional assistance and an attorney can help them with legal conservatorship or guardianship which can also be used.
  The bottom line though is that yes, there are programs that can help them and if they intend to use one of them, they should contact us or visit our calculator to see what they could expect in benefits and if that works for them and their needs, they can discuss the POA or other requirements.
  Reply to Michael
Dorothy J.
October 12th, 2019

When you have a reverse mortgage what do they mean when they say that you have not taken advantage of your 18 month waiting period. What does this mean?
Reply to Dorothy
- Michael Branson
  October 12th, 2019
  
  Hello Dorothy,
  
  There is no 18-month waiting period on the HUD HECM program. I can only assume you are referring to a marketing piece you have received from an originator who is advertising refinancing reverse mortgages, and this is their "pitch".
  Most lenders who belong to the National Reverse Mortgage Lenders Association (NRMLA) must follow a code of ethics instituted to protect borrowers, and therefore most lenders will not allow a refinance of the loan for a minimum of 18 months. Refinancing any more frequently than that becomes a case of equity stripping rather than helping the borrower.
  Equity stripping occurs when originators talk borrowers into multiple refinance transactions with multiple fees over and over. We saw that happening several years ago and so even though HUD did not have an "18-month rule", the industry stepped in to protect borrowers from unethical originators bent on looking only to refinance loans to the detriment of borrowers.
  Since then HUD has also implemented rules that the loan must benefit the borrower in other ways as well. If you have a reverse mortgage, it is no doubt that you receive constant offers to refinance your loan. If an individual or company is now telling you that you have not taken advantage of an 18-month waiting period, it is a marketing attempt to garner your interest.
  What they mean is that you are beyond the 18 months that lenders require them to wait before they can refinance your loan and so they are now trying to convince you to check out their services.
  If you are considering a refinance, you may want to see what they have to offer but I would always encourage all borrowers to get multiple proposals to be sure you are getting the best deal for your circumstances.
  It always pays to get quotes from multiple rated lenders and not just one that sends you a flyer in the mail.
  Reply to Michael
Luis M,
September 10th, 2019

I recently applied to refinance my existing reverse loan, which I took out in May 2016. My current reverse statement shows an ending loan balance, of $186,000, which includes interest and mortgage insurance which I didn't pay and thus rolled into my reverse loan. The statement also shows $135,000 line of credit. The top entry in the Balances Summary section of the statement is $321,000 which is labeled Principal Limit.
My home appraised for $486,000 now; it was $429,000 in May 2016. Although the mortgage broker is charging me zero costs -- she says she's giving me credit for all the costs and will use her lender's compensation to do the credit, she said her firm is declining to do my refinance to lower my interest rate (with a reduced margin and reduced mortgage insurance premium, I'm reducing my interest by 1.75%, before factoring in the 1-yr libor index in my reverse) because the loan proceeds test is failing the required test. (She said that being the refinance is zero cost, the other test, closing cost test is ok.)
Asked how so, she said the calculation for the loan proceeds test is as follows: The new Principal Limit of the new reverse, which happens to be $312k, LESS the Principal Limit of $321k, per the reverse statement = a negative $9k. She said to pass the test, the result should be a positive amount, and that positive amount should be at least 5% of the new reverse Principal Limit. Is the broker's calculation of the loan proceeds test correct?
Reply to Luis
- Michael Branson
  September 10th, 2019
  
  Good Afternoon Luis,
  
  It very well could be. HUD added a second level of requirements a while back which now has a requirement for both cost benefit and proceeds benefit. However, you may be able to do better with a lower margin.
  I would encourage you to try our HECM refinance calculator. There is no magic pill, but the lower the margin, the higher the proceeds are if she had you above the HUD floor.
  I don't know what margin she was offering so I cannot say. It certainly is worth a shot since it costs nothing to try and there is never any obligation or hassle.
  Reply to Michael
Madeline B.
September 8th, 2019

I have a reverse mortgage and go to my daughter's house for five months in the summer. The reverse mortgage lender we have recently sent people from Guardian Asset Management to take pictures. We sign a form each year confirming our residency, so I am confused and concerned.
We are up to date on our insurance and taxes. Can we refinance even if we do not take out any cash, I just want to get away from these people. Finally, as long as we are in the home 6 months and a day we are in requirement for FHA insurance on this loan?
Reply to Madeline
- Michael Branson
  September 8th, 2019
  
  Hello Madeline,
  
  Yes, you can refinance if you meet the HUD requirements. Rather than paying the costs for a new loan though if you aren't even looking for additional funds, I would advise you to contact the servicer and let them know that you visit your family during the hot months but never for more than allowed, that your home is definitely your primary residence and if they want to see a driver's license, bank account or whatever to see that you still only use that address you would be happy to supply any documentation they request.
  Reply to Michael
Cori S.
August 8th, 2019

My parents got a reverse mortgage and they have spent every dime of the money and are now broke except for their Social Security monthly checks. Their home needs a roof to repair leaks and the estimate is $10,000. They cannot get a loan for this and have no way to get the money. Can the bank that they took the reverse mortgage out help in this situation?
Reply to Cori
- Michael Branson
  August 8th, 2019
  
  Hello Cori,
  
  The loan can be refinanced and if they are eligible under the current guidelines, they may be able to access more funds. This is an unfortunate situation and I hope that your parents have the equity to obtain the funds they need.
  However, you need to take a good hard look at their total circumstances and determine if this is the right move for them. A refinance may not be in their best interest and if there is still strong equity, a move or downsize might be more in their best interest.
  
  We tell borrowers from the start that if the combination of the funds available from the reverse mortgage and no payment on the loan is still not sufficient to allow you to live comfortably in the home and have funds available for any other expenditures that may arise (like roof repairs), then maybe a reverse mortgage is not the correct solution for their circumstances.
  Many times borrowers do not want to think about downsizing and moving but if even after the loan closes and you have no payments on your home you have no ability to put money aside for anything that comes up for medical or home repairs, you may have to consider a downsize before you begin to use your equity to remain in a home you cannot afford.
  The time to have this conversation with family and loved ones is early on and it might be a difficult conversation to have, but it might be one you must have with them now.
  Reply to Michael
Jan
July 12th, 2019

I am 70 years old, will I get more money if only I take a reverse mortgage refinance than if I wait until my husband is 62 and we are both on the loan?
Reply to Jan
- Michael Branson
  July 12th, 2019
  
  Hello Jan,
  
  HUD changed the rules a few years back to where it no longer matters. If you are married and your spouse also occupies the home, that age will also be used to determine the reverse mortgage benefit. The only real question is how you intend to take the money and what the effect that will have on your spouse. For example, if you are using all the funds at the close just to pay off your existing mortgage, there is no reason to wait if you don't want to.
  The benefit will be the same and your spouse, although he would be considered an eligible non-borrowing spouse and would not be on the loan, could also live in the home for life even if something happened to you (assuming he also meets all the reverse mortgage requirements such as paying the taxes and insurance, lives in the home as his primary residence and maintains the home in a reasonable manner).
  However, if you plan to use the line of credit and only take a little of the money at a time, if you do the loan before your spouse is 62, he would not have access to the loan funds if something happened to you. He could stay in the property but would not have access to any remaining funds on the line of credit so if that was the option you planned on selecting, you may want to wait until he is 62.
  Reply to Michael
CJ
January 28th, 2019

My husband has a reverse mortgage...we were recently married. I am not on title to the home. He has $100000.00 line of credit. Should we pay off RM? Refinance RM with my name on it? Draw the $100,000.00 and save it? Which would be the best financially? OR... is there another solution? We have no one that wants to keep the home...Could we get a monthly income from new reverse mortgage?
Reply to CJ
- Michael Branson
  January 28th, 2019
  
  Hello CJ,
  
  What the "right" choice is would be the one that is right for you both!
  For example, if anything happens to your husband now, you do not have the right to remain in the home on the current mortgage. He can add you to title which would give you the right to the home, but you would still have to refinance the loan or sell the house if you were unable to do so. If you take all the remaining funds now, you will accrue interest on those funds and unless you can get a return of at least the same rate as the interest you accrue, you are losing money by just putting the funds in the bank.
  
  You can refinance and get a loan in both your names, but you must qualify under today's refinance guidelines and parameters. If the property has increased in value or you can now take advantage of the new jumbo programs that are available, you may even have access to more money than you did before. If the property has not appreciated, with the interest accrued, the increases in interest rates over the years and HUD's changes, you may not be able to qualify for as much money as you currently have available on the line now.
  
  The only way to know the right decision is to know what the right decision is for you. If your number one priority is to be sure you also can remain in the home for life now, then you want to see about doing a refinance in both of your names. If you think that $100,000 would suffice even if something happened to your spouse and you had to sell the home and move, you may want to add your name to title now and take the funds out to ensure they are always available to you but just know that the balance owed will increase faster.
  I would suggest that you check out the circumstances you would both receive together on our online calculator so you can see what you would expect to receive with a new loan at this time. At least this way you will get an idea of where you stand and what your options truly are.
  And remember, whatever you choose, you can be added to title at any time which won't stop the loan from becoming due if something were to happen to your spouse but it would prevent you from having to worry about the title at that time and I wholeheartedly recommend you contact a title company to do that as soon as possible.
  Reply to Michael
Linda
July 12th, 2017

My parents maxed out on their reverse mortgage - no longer receiving payments. The house is worth more than the original loan amount. Can they tap into that equity with another reverse mortgage?
Reply to Linda
- Michael Branson
  July 12th, 2017
  
  Hi Linda,
  
  They can always refinance with another loan if they can qualify for one or sell the home. It's their house and there is no prepayment penalty for paying the loan off. They have every option available to them as any other homeowner with any other type of loan.
  Reply to Michael
Ron Bruns
August 30th, 2016

The banks and mortgage companies are rejecting me due to the levels of "risk" involved with my particular situation. 1. Manufactured home = Deprecating asset. 2. Property not my primary residence. 3. Property held in a trust. (Of which I am the trustee) I've been attempting to secure this loan as an income
property. No standard lender will touch it. Any suggestions?
Reply to Ron
Joyce Sims
July 26th, 2015

I have a reverse mortage with a company in Texas I want to apply for a second do I have to stay with them or can I go through another company I am 76 years of age
Reply to Joyce
Pam Hoffman
March 25th, 2014

Thanks so much for your comments, Mike! I will share with my husband & look into getting permission now to partition the property. We will certainly keep you in mind, after we do our "homework." Have a great day!
Reply to Pam
CARL
December 8th, 2013

I purchased a "four" unit property (short sale) to live in two years ago using a reverse mortgage. The property appraised for $360k. The property was in poor condition compared to identical properties in the area that were sold or valued at about $550k. After investing more than $150k into the property I have been told that mine will easily appraise for $600k. My original Principal Limit was $244k and currently has risen to $265k. My balance is $200k. As I settle in to retire I would like to increase my Principal Limit by refinancing with a new Reverse Mortgage so funds will be available if I should ever need them in the future. What would my new Principal Balance be if I refinance with a new Reverse Mortgage based on a property appraisal of $600k? And what will my costs be if I apply for a variable interest rate or fixed rate loan and take all the money up front? From reading other's questions, I understand PMI will only be charged on the increase between the two loans. Thanks!
Reply to CARL
- Michael Branson
  December 11th, 2013
  
  Hi Carl,
  There really is no way to determine 100% the eligibility amounts or all of your options without a little more specific information on a HECM to HECM refinance and would need a copy of your most recent statement, the zip code where the property is located and your month and year of birth to be able to give you a more accurate answer. HUD has changed the program from when you received your last reverse mortgage and borrowers no longer receive as much money under the program as they did before.
  Also, you can no longer get all the available proceeds as a lump sum under the new guidelines. But as a "general" response, I would say that based on the numbers I do have, you would probably qualify under the HUD rules for the refinance requirements. We would have to run the actual numbers to see that you meet the HUD 5 times benefit rule and I would be happy to show you how much you would be able to receive, and the options for receipt of the funds if you would like to send us the information requested above.
  On your last point, you do only pay the difference of the Mortgage Insurance that you paid on the last transaction and the premium on the new program, but another important thing to remember is that the HUD Up-Front Mortgage Insurance Premium (UFMIP) on the program for loans utilizing the amount of the program that you would (greater than 60% of the available Principal Limit) has been increased to 2.5% from 2%.
  So, on $360,000 at 2% your old UFMIP would have been $7,200 and the new value of $600,000 at 2.5% is $15,000 so the difference that would be due with the refinance would be $7800.00.
  Reply to Michael
Larry Joyner
July 12th, 2013

Thanks for the explanation. Very clear.
Reply to Larry
Margie Rose
February 26th, 2013

My parents are both now deceased, they have a reverse mortgage on the home and leaving
me heir to the home, I am also over 62 years. My question, can I get a reverse mortgage
on top of the old reverse mortgage? Or can I refinance with signing a new reverse mortgage
and will the new signing pay off the old reverse morgage?
Reply to Margie
- Michael Branson
  February 26th, 2013
  
  Hi Margie,
  Being over 62, you do meet the requirements for a reverse mortgage of your own. The loan will be based on the home's value or the HUD maximum Limit, your age, and interest rates so depending on those factors when your parents secured their loan, you may or may not be able to get a loan that is sufficient to pay off the entire balance on the existing loan.
  The only way to know is to have a reverse mortgage lender run your information through the calculator to see what your benefits will be. If your benefit amount is not adequate to cover the entire balance owed on your parents' reverse mortgage, you can come in with the difference to allow you to still close using a reverse mortgage if you so choose.
  Of course you could always utilize other financing instead of a new reverse mortgage if you wish instead. However, the existing loan would have to be paid off now that your parents are no longer living in the home.
  Reply to Michael
Julie C.
January 29th, 2013

Hello - My aunt has a reverse mortgage for her condo. She is 83 and in failing health. If she passes on, would my husband and I be able to refinance the loan to keep the property (for rental) or would the property need to be sold to pay back the loan? I want to be able to have all the answers for my aunt when we sit together to review everything (I'm her power of attorney at this point and will be the executrix of the will when it is written). Thank you for any help you can provide.
Reply to Julie
- Michael Branson
  January 29th, 2013
  
  Hi Julie,
  I'm sorry that your aunt feels she has to worry about this at a time when her health is not good. If you are your aunt's heir, she does not have to worry about whether or not you can keep the property after her passing. As her heir, the property would become yours and what you did at that time is entirely up to you. You could refinance the loan with other financing and keep the property, you could sell the property and pay the loan off with the proceeds or you could pay the loan off with other funds available to you. In fact, the first thing that you want to do is find out the value of the home.
  If the current value is less than what is owed on the home, you can pay off the loan by paying 95% of the current value of the property rather than the full balance of the reverse mortgage. Heirs can also choose not to become involved in the sale of the home if they do not wish to and neither HUD nor the Lender can ever seek to repay the loan with any other assets - the home is the sole source they can look to for repayment of the debt.
  This is a time when your aunt should be concentrating on improving her health, not worrying about her reverse mortgage. Luckily, you don't need to worry about it either since you can choose the course of action that is best for you and your family as well.
  Reply to Michael
s2kreno
January 28th, 2013

Good morning,
I am curious about refinancing to a fixed rate. If you have incurred a balance under a scheme of monthly payments and a variable rate, can you convert that balance to a fixed rate (lump sum) when you refinance?
Reply to s2kreno
Raymond P
March 25th, 2012

I have a reverse mortgage with a line of credit for $75000 which is used up. I would like to refinance for a lump sum. The house was appraised at $136000 a year ago and the taxes say it is worth $184000.
Reply to Raymond
- Michael Branson
  March 26th, 2012
  
  Hi Raymond,
  HUD has some very precise requirements on the reverse mortgage refinance but they can be done. It will all depend on the parameters that were in place when you did your first reverse mortgage and what your current benefits are. There are also some exceptions HUD will allow so your best bet is to contact us with your most recent monthly statement available and we will be happy to run the numbers.
  You may just qualify for a low fixed rate and you won't have to pay a second time for any Up-Front Mortgage Insurance Premium for which you have already paid.
  Reply to Michael
Sandra
January 30th, 2012

I just want to see about refinancing my reverse mortgage, are the current interest rates lower?
Reply to Sandra