Can I Refinance My Reverse Mortgage Loan To Get More Monthly Cash
The reason for the reverse mortgage loan refinancing would be, that the interest rates have fallen, your home appraised value has risen or that you have a chance to negotiate longer payment time. Yes, the reverse mortgage loan can be refinanced.
A senior has to keep in mind, that before he will refinance the reverse mortgage loan he must compare the amount of the benefits with the cost of the refinancing. As a rule we can say, that the benefits should be twice as big as the costs.
1. If You Want Longer Payment Time, You Will Pay More.
The longer payment time means lower monthly payments, but will increase the total amount of paid interests. If you succeed to negotiate the fixed interest rate during the present low rate period, you may make a good agreement. The accrued interests will increase the total sum, which will be paid at closing and this can bring a bad surprise to you and to the heirs.
2. The Payment Time.
All loans must be paid back. After you have taken the original reverse home mortgage and after you have refinanced it, it can take years, before the loan must be paid back. That time comes, when the last borrower will move away, sell the home or pass away.
Then the final calculation will be made and the capital, interests and all the costs will be paid away. If the selling price of the home does not cover the whole amount, the obligatory mortgage insurance will pay the missing part.
3. The Reverse Loan Is A Non-Recourse Loan.
Odd term, what does it mean? It means that the lender cannot use any other assets of the borrower to pay away the reverse loan costs. This protects the borrower and is a reason, why the lenders do not ask the income nor the credit information from the borrower. The obligatory mortgage insurance guarantees, that the lender will always get, what is his money.
4. How Does A Reverse Loan Differ From The Home Equity Loan?
Both loans have the same job: to use a part of the home equity and to turn it into cash money. The main difference comes from the fact, that with the home equity loan a borrower must pay the monthly payments, but with the reverse loan everything will be paid back, when the loan will be closed.
With the reverse loan a borrower have to use the home as his primary residence, to pay the property taxes, the hazard insurances and homeowner association dues. He has to make the needed repairs and to keep the property in a good condition. If he does not do these, it can lead to results in the loan becoming due and payable.
A senior has to keep in mind, that before he will refinance the reverse mortgage loan he must compare the amount of the benefits with the cost of the refinancing. As a rule we can say, that the benefits should be twice as big as the costs.
1. If You Want Longer Payment Time, You Will Pay More.
The longer payment time means lower monthly payments, but will increase the total amount of paid interests. If you succeed to negotiate the fixed interest rate during the present low rate period, you may make a good agreement. The accrued interests will increase the total sum, which will be paid at closing and this can bring a bad surprise to you and to the heirs.
2. The Payment Time.
All loans must be paid back. After you have taken the original reverse home mortgage and after you have refinanced it, it can take years, before the loan must be paid back. That time comes, when the last borrower will move away, sell the home or pass away.
Then the final calculation will be made and the capital, interests and all the costs will be paid away. If the selling price of the home does not cover the whole amount, the obligatory mortgage insurance will pay the missing part.
3. The Reverse Loan Is A Non-Recourse Loan.
Odd term, what does it mean? It means that the lender cannot use any other assets of the borrower to pay away the reverse loan costs. This protects the borrower and is a reason, why the lenders do not ask the income nor the credit information from the borrower. The obligatory mortgage insurance guarantees, that the lender will always get, what is his money.
4. How Does A Reverse Loan Differ From The Home Equity Loan?
Both loans have the same job: to use a part of the home equity and to turn it into cash money. The main difference comes from the fact, that with the home equity loan a borrower must pay the monthly payments, but with the reverse loan everything will be paid back, when the loan will be closed.
With the reverse loan a borrower have to use the home as his primary residence, to pay the property taxes, the hazard insurances and homeowner association dues. He has to make the needed repairs and to keep the property in a good condition. If he does not do these, it can lead to results in the loan becoming due and payable.
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