Refinancing a Reverse Mortgage

A reverse mortgage is a type of loan that helps many seniors stay in their homes and tap into the equity in their homes to cover living expenses in retirement. The homeowner must be 62 years or older. Reverse mortgage borrowers must still pay homeowner’s insurance as well as property tax.

When the last surviving borrower of the reverse mortgage passes away, no longer lives in the home or sells the home the reverse mortgage must be repaid. In the event that the last borrower passes away, the home will most likely be inherited by the heirs of the homeowner. At this point the heirs must take action to repay the reverse mortgage. Heirs are usually given around 6 months to repay the loan.

The common options for heirs include selling the home, keeping the home and providing the funds to pay off the loan or keeping the home by obtaining a refinance reverse mortgage loan for heirs . Refinancing a reverse mortgage is often difficult as conventional lenders such as banks or credit unions are not able to provide this type of loan because the heir’s name is not on title of the property.

How Heirs Can Refinance a Reverse Mortgage

Heirs have few options for refinancing reverse mortgage loans since banks and credit unions are not able to provide this type of loan. Hard money lenders are one source of financing that may allow for a reverse mortgage refinance by providing a very short-term loan. A hard money lender can first provide a loan to the estate to refinance the reverse mortgage and have the heirs personally guarantee and assume the loan. After the loan has been refinanced the title to the property can be put into the name of the heirs, which would then allow the heirs to refinance with a low cost loan from a bank or credit union.

Hard money loans can be approved and funded at a much faster pace but have a higher interest rates than conventional bank loans. Hard money loans are intended for short-term use only, generally 1-5 years.

Please see our Refinance Reverse Mortgage Loans for Heirs page for additional information.