A reverse mortgage can provide homeowners who are at least
62 years old access to home equity. Just like a traditional mortgage, a reverse
mortgage could be refinanced, and this move sometimes makes more sense.
Understanding Reverse Mortgages
A reverse mortgage is a type of loan that lets older
borrowers tap into their home equity. Unlike a conventional mortgage, which
asks the borrowers to pay a lender, a reverse mortgage requires the lender to
make pay the borrower regularly.
Interest will accrue on the reverse mortgage loan with the
repayment on the principal loan and interest deferred until you pass away, move
out, or sell the home. This could be helpful in terms of supplementing your
retirement income. However, it deducts equity from your house.
Types of Reverse Mortgages
There are a few types of reverse mortgages.
HECMs or Home Equity Conversion Mortgages – insured by the
FHA or Federal Housing Administration. If you are looking to buy a new home
then you should consider HECM for Purchase mortgages.
Proprietary Reverse Mortgages – similar to HECMs. The main difference
is that they are not insured by the government.
Single Purpose Reverse Mortgages – are used for a single
purchase
How Does Reverse Mortgage Refinance Works?
Knowing the process involved in a reverse mortgage refinance
is helpful regardless of the reason why you want to have one.
Refinancing a reverse mortgage loan is comparable to
refinancing a traditional mortgage. Basically, you are replacing your reverse
mortgage with a new, different, and better loan. The new one might have a
different interest rate or provide a different monthly payout, based on the
financing terms.
You need to meet a certain set of criteria if you wish to
qualify for a reverse mortgage refinance. There should be a definitive
advantage for a lender to justify refinancing the reverse mortgage of a lender.
This rule was set in place by the National Reverse Mortgage Lenders
Association.
The rule states that when a reverse mortgage is refinanced,
the rise in the principal amount should be equal or more than five times the
closing cost of the loan. The loan proceeds should be equal to ore above 5% of
the amount that is being refinanced.
Apart from that, homeowners is required to meet a seasoning
requirement, which refers to the duration when you’ve held the mortgage. You
could refinance if it’s been at least 18 months since you closed your original
reverse mortgage.
The borrower must also qualify for a new reverse mortgage in Greenville.
Fortunately, the criteria that is used to determine if a borrower qualifies or
not for a reverse mortgage is the same with the requirements for refinancing.
The borrower requirements for HECMs are as follows:
- - At least 62 years old
- - You are using your home as your primary residence
- - You own the house or you have paid a significant amount of the original mortgage.
- - Not being a delinquent on your federal debt
- Have
the ability to fulfill your financial obligations that are related to the house
like homeowners insurance, property taxes, and homeowners association fees.
The property also needs to meet the requirements set by the
FHA. Basically, it means the owner must occupy one unit of the house. There
shouldn’t be any safety or health hazards and the owner should have flood
insurance if the property is located in a high risk area.
Call Reverse Mortgage Specialist for more information about reverse mortgage refinancing.
David Stacey
Reverse Mortgage Specialist
Greenville, SC 29607
864 920 2733
http://reversemortgagegreenvillesc.com/
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