Q:

What are some factors to consider when deciding whether to refinance a reverse mortgage?

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Quick Answer

Some important factors to consider when deciding whether to refinance a reverse mortgage include the age of the borrower, the interest rate of the chosen refinancing program and the value of the property. Reverse mortgages do not require monthly payments, according to Consumer Finance.

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What are some factors to consider when deciding whether to refinance a reverse mortgage?
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Full Answer

The main reason for refinancing a reverse mortgage is the change in interest rates. Consumers need to take into account the fact that the balance of a reverse mortgage accumulate interest continuously until it is repaid, which means that a lower interest rate means less interest paid for the duration of the mortgage. An increased cash payout is another goal of those who decide to refinance their reverse mortgage. Because the age of the borrower and the value of the home are not the same as when the initial mortgage was taken out, the consumer is often entitled to more cash.

When refinancing a reverse mortgage, individuals should take into account the implications for the family, advises Forbes. This type of mortgage can have a serious impact on family members living in the property who did not go in on the loan. To qualify for a reverse mortgage refinancing, individuals need to prove they can pay their homeowner mortgage.

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