Is a property Equity Loan a Good Idea?
May 19, 2020Is a property Equity Loan a Good Idea?
May 19, 2020
If you have an existing reverse mortgage, you might be considering refinancing. You may wish to switch from adjustable-rate to fixed-rate payments, recognize an increase in your home’s value, or make it easier to keep the property in your family. No matter the reason, refinancing your reverse mortgage is fairly simple. Here’s everything you need to know about reverse mortgages, how to refinance them, and the benefits and drawbacks of a refi reverse mortgage.
What Is a Reverse Mortgage?
A reverse mortgage is a type of home loan that allows you to use your home equity instead of making payments on a mortgage. With a reverse mortgage, the lender sends regular payments to you as the homeowner, rather than you making mortgage payments to the lender. The home loan will collect interest – however, your interest payments are deferred until you sell your home or pass away. Reverse mortgages are available in several types: Home Equity Conversion Mortgages (HECMs), single-purpose, and proprietary reverse mortgages. Each type of reverse mortgage comes with specific eligibility requirements you must meet should you choose to refinance your reverse mortgage in the future.
Disadvantages of Refinancing Your Reverse Mortgage
There are also drawbacks to a reverse mortgage refinance, including: Your property may not qualify. If the home you want a refi reverse mortgage for isn’t your primary residence, it may not qualify for refinancing. There are costs to refinancing. You’ll be responsible for any fees for refinancing, similar to a traditional mortgage. You may be responsible for repaying the loan. If you fail to pay your insurance or property taxes or maintain the property, your loan may become due. If you’re interested in refinancing your reverse mortgage but don’t want the monthly payments, consider a home equity investment. An HEI lets you maintain control of your home. To learn more about this option, get in touch with one of Arex FAST’s team members. Find out how much you can get today.