Financing Retirement

The Refinancing Tool You May be Overlooking: A Reverse Mortgage Loan

You’ve been steadily paying your mortgage and building equity in your home for decades. And now, as you approach retirement and consider the reality of a fixed income, you may be thinking about refinancing your existing mortgage to help reduce monthly payments.

Refinancing is replacing your existing loan with a new loan — one that has better terms and features to help improve your financial situation. Homeowners with a traditional mortgage frequently use this strategy to help save money on interest payments, reduce their required monthly mortgage payment, and/or access a new source of funds.

But if you’re in or approaching retirement, you may qualify for an option that provides more flexibility and additional financial benefits than a traditional reverse mortgage — a reverse mortgage loan.

Reverse mortgage 101: Smarter refinancing for retirees

Designed for homeowners and homebuyers age 62 and up, a reverse mortgage loan can be a great financing choice for retirees. One of the most common reasons homeowners get a reverse mortgage is to refinance an existing mortgage, to significantly reduce monthly debt payments so you have more money at your disposal for other things. It allows you to borrow against your home equity and frees up funds that you can use today, or a line of credit that you’ll have access to when you need it. As a result, you can continue to live in your own home with greater comfort and financial flexibility. One of the most attractive aspects of a reverse mortgage is its flexible repayment feature: You can pay as much or as little as you like each month toward principal and interest, or make no monthly loan payments at all while you continue living in the home. You just have to meet your loan obligations, keeping current with property taxes, insurance, maintenance, and any homeowners association fees. You can even use your reverse mortgage proceeds to cover those expenses.

A similar loan option, Equity Elite, is available to homeowners and homebuyers as young as 60, and is designed specifically for higher-value homes as well as condo owners and buyers. Available in certain states, this new loan option offers loan amounts of up to $4 million (depending on home value), as well as no Mortgage Insurance Premium (MIP) fees and an option called Equity Elite Zero^† that eliminates nearly all up-front costs.

A powerful refinancing option that may be more suitable if you’re 60 or older

A reverse mortgage refinance consists of refinancing your current mortgage, home equity loan, or home equity line of credit into a new reverse mortgage loan. Once the loan requirements are met and the loan is secured, you can use the funds to pay off the existing mortgage on your home, while being able to drastically reduce your monthly bills, thanks to the reverse mortgage’s flexible repayment feature. You can also use a reverse mortgage to consolidate other types of debt, such as credit card balances and car loans. The results:

• You’ll have extra funds for home repairs, remodeling or unexpected expenses
• You can be more financially prepared for the future
• You can avoid or delay tapping in your retirement savings and assets as a source of income

Taking a different approach to retirement savings

Planning now is the key to making the most of your retirement funds in the future. Reverse Mortgage Funding can help you stay on track with solutions to meet your financial goals. Call (888) 277-1567 today to speak with a licensed reverse mortgage specialist about your loan refinancing options.

^†With this pricing option, borrower receives a lender credit covering nearly all closing costs. There is a non-refundable independent counseling fee of approximately $125 on average, which the borrower pays directly to the counseling agency. Terms and conditions apply. Not available in all states.

Equity Elite Reverse Mortgage (“Equity Elite”) is Reverse Mortgage Funding LLC’s proprietary loan program, and it is not affiliated with the Home Equity Conversion Mortgage (HECM) loan program, which is insured by FHA. Equity Elite is available to qualified borrowers who also may be eligible for HUD, FHA’s HECM program or are seeking loan proceeds that are higher than HUD, FHA’s HECM program limit. Equity Elite currently is available only for eligible properties in select states. Please contact your loan originator to see if it is currently available in your state. 

Upon a maturity event, any non-borrowing individuals with an ownership interest in the property, including non-borrowing spouses, will have 90 days to purchase the property from the estate or, if the non-borrower inherits the property, pay the loan in full using any sources of funds available to them. Any non-borrowing individual, including a non-borrowing spouse, should have a plan to pay off an Equity Elite reverse mortgage upon the borrower’s death or any other maturity event. If the non-borrower is unwilling or unable to purchase the property or pay the loan in full, there is no protection for the non-borrower (including a non-borrower spouse) to maintain an interest in the home or to continue residing in the home past the maturity event and the non-borrower may be evicted upon foreclosure. The FHA HECM program has protections in place for certain non-borrowing parties, so a reverse mortgage applicant with certain non-borrowing parties should strongly consider a FHA-insured HECM loan (see HECM guidelines or ask an RMF representative for details). Under the Equity Elite reverse mortgage loan program, a maturity event occurs when the last surviving borrower no longer lives in the home as his or her primary residence for at least 12 months, the property charges (including taxes, insurance, HOA dues or any other property charges) are not paid, required repairs are not completed or the property is not maintained, or any other maturity event, as specified in the Security Instrument, occurs.

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