How a Reverse Mortgage Refinance Works

Hey, this is Cliff Auerswald with All Reverse Mortgage Company, and today I'm doing a video screenshot on how a reverse mortgage for refinance works if you are eligible. A lot of times we get calls and requests on our website for reverse mortgage refinances just to lower interest rates, but unfortunately you cannot do a reverse mortgage refinance unless there is a cash benefit to you. FHA has set that guideline. Unfortunately, you You can't just refinance into a lower rate. So today I have a customer who's come to us with a reverse mortgage where he actually got it done in 2006. And during that time, in the early— all the way up until 2009, actually, the lending limits on reverse mortgages were much lower than they are today. Today we have a lending limit Not to be confused with loan amount, but lending limit to us means the maximum consideration to your appraised value. The single national lending limit right now is $625,500, and that was brought out in 2009 as part of the economic stimulus package. And each year thereafter, we've received an extension of that lending limit of $629,500, which is the current limit. So anybody who basically took out a reverse mortgage prior to 2009, their property values were not considered as much as they are today if the value came— was over the old lending limit. So in 2006, we had a national limit, or in certain counties, of $362,000. And at that time, my client here that I'm doing a proposal for Um, he only received a certain percentage of the loan based on that, even though his property value was well above. So now repaying an old reverse mortgage of $148,000, uh, we have available funds of another $180,000 on top of that. So in this case, it actually does look like it, it's a good candidate to refinance or reverse mortgage if the additional funds can do well for you over the years. And you can either do again the line of credit, a lump sum, you can convert it over to any product that's currently on the market including fixed interest rates. So the, the way the refinance works is the closing costs, you don't pay all of them twice. You really just pay into the mortgage insurance premium up into the lending limit. So when this client of mine, or prospect, got a reverse mortgage in 2006, he paid 2% of the lending limit at the time. The difference is this figure you see here, $5,900. That's— reverse mortgages require 2% of the appraised value as upfront mortgage insurance premium. So if this was a new reverse mortgage, he would have a $10,000 finance fee But because he already paid into some of that on his first one, he's only paying the difference up into the new lending limit. And that is basically how the reverse mortgage for refinance works. If you're looking for a quote for yourself, just go to allrmc.com or call 1-800-565-1722.