Refinance A Reverse Mortgage
Refinance Your Reverse Mortgage
Now is a great time to refinance your existing HECM reverse mortgage! Good Day Reverse offers the latest reverse mortgage programs that may lower your current reverse mortgage interest rate and get you additional money back. Our advantage is we offer reverse mortgage refinance programs where we discount the origination fee. The results are better loans, lower fees and more money in your pocket. Why get less, when you can get more!
Refinance A Reverse Mortgage For More Money!
The most popular reason we have seen homeowners inquire to refinance their reverse mortgage is to qualify to receive more money. In order to qualify to receive more money we need to first check if the subject property has additional equity that we can access. This is accomplished by checking two things for the refinance. First, has the lending limit increased to immediately open up additional equity that can be accessed by a reverse mortgage refinance? Second, has the subject property increased in value enough over the past 18+ months, so that we can access additional equity for the reverse mortgage refinance? If one, or both, of these events have happened then we can take the first step into trying to qualify the homeowner for more money.
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Refinance A Reverse Mortgage For A Better Rate Or Program!
Another common reason that homeowners inquire about a reverse mortgage refinance is to better their current rate or program. Good Day Reverse has been able to accomplish this for many homeowners. Many times we speak with homeowners who received their initial reverse mortgage from another company and were given a higher interest rate or margin than what we offer our clients. In this scenario it is very easy for us to better a situation. The reverse mortgage landscape also goes through changes that might either create new programs, or drop margins on others. This is another way that we help homeowners better their reverse mortgage. We can also refinance a reverse mortgage to make a current adjustable rate loan be a fixed rate. Or, vice versa, refinancing a fixed rate loan to be an adjustable rate.
How Do I Get Started Refinancing My Reverse Mortgage?
Each homeowner has a set of objectives that they would like to achieve through a refinance. There are a couple factors that we need to look at when qualifying homeowners for a reverse mortgage refinance.
Has the home increased in value?
One of the first things that we need to take a look at is if the property has increased in value since the original reverse mortgage funded. This is maybe the most important factor that is involved when qualifying a borrower for a refinance. The additional money that the property has increased in value is potential equity that can be secured when refinancing.
What is the current loan balance?
Another important factor in qualifying to refinance is what the borrower currently owes on their existing reverse mortgage. Each borrower receives a monthly statement giving them details on their current loan. Simply look for a line item that references “current loan balance” to know what would need to be paid off before assuming the new loan. In addition we need to know if the borrower still has any available money in a line of credit. In the event a borrower still has an available line of credit we need to include in the equation to ensure the borrower is receiving an adequate comparison. This will set the borrowers current principal limit that the new reverse mortgage needs to be higher than. If not, then a refinance will not bring the borrower more money than what they currently have.
The 5% Refinance Rule?
There is a new rule that the loan scenario must pass to qualify for the refinance. The additional money that a borrower looks to receive with a refinance needs to be at least 5% of the new proposed principal limit. For example if the new principal limit is $250,000 then the refinance needs to qualify borrowers to receive at least 5%, or in this case $12,500, in available money.
The 5x Refinance Rule?
This is another test that must be passed for a refinance to be approved. The 5x Rule states that the borrower must qualify to receive 5 times the available money as the fees of the refinance. For example if a borrower is receiving an additional $30,000 in a refinance and the fees are $5,000 then this scenario would pass since the available money is 6 times the fees.
The 18-Month Refinance Rule
The refinance needs to start at least 18-months after the original reverse mortgage funded. It is important to understand these dates, because it is based on the new application date. The process can be out of compliance from day 1 if this is not researched first. The easiest thing to do is either pull up the HUD statement from the previous reverse mortgage closing, or call the current servicing department and ask when the reverse mortgage closed.
Income and Credit Qualifying
The reverse mortgage is now income and credit qualifying. This new qualification is commonly referred to as “financial assessment.” It involves various factors including, but not limited too, credit payment history, monthly debt and a borrowers income. The easiest way to assess this situation is to be provided with a borrowers income information and compare it against the information pulled on a credit report. Addition questions or conditions may apply.
The Reverse Mortgage Refinance Process
You will probably find that the reverse mortgage refinance process is similar to the process you originally went through in obtaining the reverse mortgage you have now. Once the objectives are met to qualify the refinance then the process of obtaining the new loan can begin. Below is a step-by-step guide on what the process looks like.
Once the current and new reverse mortgage loan numbers are set then an application can be generated. The application will show the details of your current reverse mortgage and the new proposed reverse mortgage. Make sure to double-check the program that you agreed upon as well as the total fees and available money.
Yes, another counseling session needs to be completed. Regardless of when the previous counseling session was completed a new certificate needs to be obtained. Just as with the original counseling appointment this session can be completed over-the-phone or in-person with an approved counselor. The session will generally take 60-90 minutes and focus on the new program details. Once completed, a new certificate will be generated that is valid for the refinance and lasts for 180 days. Some states may require forms to be signed from the application prior to counseling, so please check with us before scheduling.
The appraisal will be ordered once the application and counseling session are complete. This appraisal will not only determine what the additional available money is, but also if the refinance will pass the 5% and 5x Rules. A copy of the appraisal will be available to the borrower.
Once the appraisal is receive then the loan package is ready to be submitted to underwriting. We generally see approvals in 24-48 hours. This approval is conditional based on the additional items underwriting needs to receive for them to issue a “clear to close.” We can usually have underwriting clear all conditions in 5-7 business days, but it depends on the conditions needed. We will keep you informed and up-to-date during the entire process.
Once we have a “clear to close” then all we need to do is set the final signing appointment. On the closing day and time a notary will bring the final documents for you to sign. Once completed there is a standard 3-day rescission before the refinance funds and the additional funds are available.
What To Expect After Refinancing My Reverse Mortgage
By this time you are familiar with the reverse mortgage since you have had one for at least 18 months. Once your reverse mortgage refinance is complete you will start receiving monthly statements on your new loan within 60 days. We are here to help make this reverse mortgage more enjoyable than the first!
We welcome any questions or comments below. If you have any additional questions, or would like to receive a special offer quote. Or call us anytime at toll-free: 877-676-6542.