San Francisco Chronicle - (Sunday)
Jumbo reverse mortgage refi takes advantage of higher values
John Holmgren, Finance of America Mortgage. Townhouse in Castro Valley
$1.36 million. HomeSafe jumbo reverse
Property: Property value: Loan type:
Loan amount: Rate: Backstory:
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.