Homeowners who already have an FHA-insured HECM reverse mortgage may be able to refinance their existing HECM into a new HECM. A refinance may be worth exploring when changes in the homeowner’s age, property value, interest rates, or current loan balance could provide a meaningful financial benefit.
Why Consider Refinancing an Existing HECM?
A HECM-to-HECM refinance may be worth evaluating if the new loan could provide a meaningful benefit to the homeowner. Possible reasons to explore refinancing may include:
The home has increased significantly in value
The homeowner is older and may qualify for greater borrowing capacity
The existing HECM has a lower principal limit than may be available today
Additional proceeds or a larger line of credit may become available
The new loan may provide more favorable terms for the homeowner's current needs
A spouse who was not originally a borrower may be able to be added as a borrower if eligible
A Refinance Must Provide a Benefit
A HECM-to-HECM refinance is not simply a way to replace an existing reverse mortgage. The new HECM must meet applicable FHA requirements, including requirements intended to demonstrate that the refinance provides a financial benefit to the borrower. The existing HECM is paid off with proceeds from the new reverse mortgage.
Before recommending a refinance, I will compare your existing HECM with the proposed new loan so you can see the potential proceeds, costs, loan terms, and overall financial impact.
Consider the Costs Before Refinancing
Refinancing an existing HECM creates a new reverse mortgage and may involve new closing costs and other loan expenses. Any potential increase in available proceeds should be considered together with the cost of obtaining the new loan.
I will help you compare the existing reverse mortgage with the proposed refinance so you can better understand whether the potential benefits justify the costs.
HECM Counseling May Be Required
HUD-approved reverse mortgage counseling is an important part of the HECM process. When refinancing an existing HECM, counseling requirements can depend on the circumstances of the transaction and applicable HUD requirements. I will help you determine whether new counseling is required before moving forward.
Existing HECM Line of Credit: If your current reverse mortgage has an unused line of credit, that benefit should be carefully compared with the new loan before refinancing. Refinancing pays off and replaces the existing HECM, so the features and available funds under the existing loan should be evaluated before making a decision.
What I Will Review With You
When evaluating a possible HECM-to-HECM refinance, we can compare:
Your current reverse mortgage balance
Your current available line of credit, if applicable
Your home’s current estimated value
The principal limit available with a new HECM
Estimated proceeds available after paying off the existing HECM
Interest rate and loan features
Estimated closing costs and other loan expenses
How the new HECM may affect your available funds and long-term goals
Important: Refinancing a reverse mortgage is not appropriate for everyone. Eligibility, available proceeds, costs, and potential benefits depend on the homeowner’s individual circumstances and current HECM program requirements.
Request a Complimentary HECM Refinance Review - Call Gidget Jackson 305-900-8217
