Dominique Stevens Refinancing reverse mortgage nets clients substantial gain

Mortgage broker: Dominique Stevens.

Property type: Single-family residence in Menlo Park.

Loan amount: $934,000. Loan type: Reverse amortization.

Rate: 5.990 percent. Backstory: Many homeowners do not realize they can refinance a reverse mortgage. As the homeowners grow older and their home increases in value, often they are entitled to obtain more cash out of the home through refinancing their current reverse mortgage. My client had a HECM FHA reverse mortgage, which has a lower capped loan amount.

It was the only reverse mortgage available until recently, when a few lenders starting offering Jumbo reverse mortgages. These Jumbo reverse mortgages are especially helpful to our Bay Area clients.

We reviewed that the current balance of the homeowner’s reverse mortgage was $417,000, and that the property would appraise for $2.5 million.

By utilizing the Jumbo reverse mortgage, we were able to pay off their current balance of $417,000 and net the couple $500,000 cash back at closing with a new loan amount of $934,000.

A reverse mortgage allows adults 62 years of age and older to halt mortgage payments forever.

The program requires that the home be their primary residence, and that the homeowner stay current on property taxes and hazard insurance. As non-taxable income, it does not affect Medicare, Social Security or pensions. Whatever equity is left after the reverse loan is paid off, goes to their heirs.