San Francisco Chronicle - (Sunday)

Jumbo reverse mortgage refi takes advantage of higher values

- John Holmgren, Finance of America Mortgage, 510-381-1961, john@mortgageho­lmgren.com.

Mortgage broker:

John Holmgren, Finance of America Mortgage. Townhouse in Castro Valley

$1.36 million. HomeSafe jumbo reverse

Property: Property value: Loan type:

mortgage.

Loan amount: Rate: Backstory:

$716,000.

7.375% fixed.

Many homeowners are not aware that reverse mortgages can be refinanced, just as traditiona­l mortgages can. Those who currently have reverse mortgages are well aware of the ability to refinance because of the torrent of mail and phone solicitati­ons they get!

While traditiona­l mortgages are usually refinanced to obtain a lower interest rate, the most common reason for refinancin­g a reverse mortgage is to take advantage of an increase in home value to access more cash from equity. That is what occurred in this case.

I assisted this homeowner with her reverse mortgage in 2020. Her home appraisal value at that time was $950,000, which enabled her to get the reverse mortgage that eliminated the need for a mortgage payment but provided no additional benefits.

On this occasion she wished to refinance to access cash since she had reduced employment income. Her home appraised for $1.36 million, a value that enabled her to pay off her previous loan and to realize a cash distributi­on of $183,000, accomplish­ing her objective.

Reverse mortgage refinances don’t always make sense, but with today’s higher property values the ability to access additional equity can be beneficial to many homeowners.

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