You have probably gotten several marketing pieces in the mail. If you have a reverse mortgage, it seems everyone wants to help you refinance. But there are things to consider before you spend your cash on some of the upfront fees.
When did you do your current reverse mortgage?
You need to have been in it at least 6 months to be eligible. So if you are getting solicited for a refinance, there is no need to even consider it for at least 6 months after you close your current loan.
If you did your loan long enough ago, there were county limits that could have limited the amount of money you could get. The amount depends on the county, so if you think this applies to you, contact you loan officer and see what may be available.
What is your home worth?
Did the value of your home suddenly change? In most cases, the senior homeowner has taken all the equity that was available. Since reverse mortgages balances actually grow each month, it may be illegally that you have more equity in your home now, than you did when you originally got the loan.
That said, it can happen. Improvements to your home or recent sales that were comparable to your home, or if your home was one that was restricted when they had lending limits based on county limits are all reasons that your home may be worth a little more.
How much are the fees?
There were significant fees when you got your reverse mortgage, almost guaranteed. But if your current reverse mortgage is a HECM mortgage, you have already paid a good portion of the fees. The Mortgage insurance was 2% of what the home appraised for, and the new loan you want to do does not require that to be paid again. This can save you thousands of dollars.
There are some lenders willing to waive origination fees also. If you can find one that is willing to reduce the fees down by at least half, you will have saved a few thousand dollars more.
Combining the two ways of saving above will save you 75% off more off your fees, bringing the costs down to a level that seems more comparable to the cost of a traditional mortgage. Most HECM refinements could have been done with the fees well inside 4000-5000 dollars.
As you can see, the reverse mortgage refinance is definitely possible. And it is more affordable than ever. Refinancing can potentially get you additional money at virtually no cost. But do not spend any money until you have checked to see if there is any tangible benefit.