Refinancing overview -> Reverse mortgages for refinancing

Reverse mortgages for refinancing

If you are 62 or older with substantial equity in your home,
refinancing with a reverse mortgage can be a powerful and useful financial tool.

A reverse mortgage should only be considered as a part of a larger financial plan after consulting with an independent, and experienced, financial advisor. Used carefully, a reverse mortgage can be very beneficial. Now under strict regulations adopted since the financial crisis, a reverse mortgage will never have monthly payments, and the lender cannot demand a payment or payoff as long as the borrower is still living in the home, no matter how long the loan has been in force, or how much is owed on it.

A reverse mortgage allows a senior homeowner to:
  • payoff a traditional mortgage that has monthly payments with a reverse mortgage that will never have a monthly payment
  • take out cash for any reason, without having to pay it back until the borrower is no longer living in the home

The cash can be taken in one of three ways:

  • as a regular monthly cash advance
  • as a credit line that gives you the option of deciding the time and the amount of the money you need
  • or as a combination of these payment methods

 

Qualifying:

Normally, when you qualify for a loan, the lender verifies that you have the income to make the mortgage payment. But with a reverse mortgage, since you don’t have to make monthly mortgage payments, the lender looks at income only to verify that you can pay your property taxes and homeowner’s insurance. Even with a very modest income, you may still qualify for a reverse mortgage.