Refinancing A Reverse Mortgage - part 2
by Bob Hartz
In all likelihood, the FHA has raised the limits on reverse mortgage borrowing in your area. Finally, there is the possibility that interest rates have fallen since you took out that initial reverse mortgage. For all these reasons, a refinanced reverse mortgage may get you, the retired citizen, a larger monthly payment from your new reverse mortgage.
Proceed with Caution
As with all refinance loans, it is important to analyze the impact that the loan's cost will have on your overall financial picture. Refinancing loans can have high initial fees. They can also be loans with interest rates that rise over time, like a standard ARM or a hybrid loan. They can be made to look far more attractive than they should look to a retired person or couple who aren't looking much beyond the next few years.
The FHA has shown a good deal of concern about predatory lending in this sector, and so should family members of people who are contemplating refinancing their reverse mortgage. At the very least, see to it that some loan shopping is done and that an independent analysis is provided so that everyone involved understands which loan is the best deal under the circumstances, and that the seniors who are refinancing their loan understand the terms of their new agreement thoroughly.
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