Posted by Sandra Clark on 7/21/12 12:04pm
Msg #427560

Refinance of a RM?

Yesterday met with a lovely lady who was re-fin a Reverse. Have never had one before. Anyone care to share their knowlege on this subject?

Reply by CentralNY on 7/21/12 12:14pm
Msg #427565

Have never done one and am certainly not an expert. I know that it can be done, but most terms of an rm are enougth to choke a horse, to refi anyway.

Reply by Sandra Clark on 7/21/12 12:26pm
Msg #427569

This one was easy - only 125 pages. It seems she originally had a RM thru BOA. Since BOA no longer does reverses she changed to new co. Only part that puzzeled me was there were several docs related to selling the original RM to current holder. Kinda of confusing and needed to place two calls to be sure those docs were for BOA to sign, selling the orignal to the current or new lender. It was a nice package other than that. Just never realized you could refi a RM. The only part I didn't like is the original RM cost her over $12,000 in closing cost and this one over $16,000. So that's roughly $29,000 of equity gone.............sadly she did not take enough out in the original RM to meet her needs. The house was valued at over a million and she can't afford the upkeep and can't sell it...........

Reply by Shoshana/AZ on 7/22/12 8:03pm
Msg #427671

The closing costs are a percentage depending on the amount of equity taken out. That's why her costs were so high. On your average $250,000 property it's maybe $5000-6000. Don't forget that it is all government regulated. Costs have gone down in the last few years.

Reply by HisHughness on 7/21/12 12:28pm
Msg #427571

The lender on a reverse mortgage ...

... may wait 30 years to recover the investment. Whatever the industry --- manufacturers of cotton candy equipment, adult movie producers, African safari organizers -- people invest to make money. Because the ultimate payoff is so long delayed, the costs of an RM are loaded heavily on the front end. Over time, the costs level out to about the same as a regular mortgage. There is a reason that "most terms of an rm are enougth to choke a horse."

I am getting the impression from this, and from another thread, that some NSAs find reverse mortgages suspect, much like credit consolidation schemes. That would be an incorrect assessment. There probably is no other aspect of the consumer home financing industry that is as closely scrutinized as the reverse mortgage market, nor one that has as many safeguards built in.

The reverse mortgage in many instances serves an absolutely vital need, and I think you should keep that in mind, along with the fact that in many instances, it is the <only> answer for some seniors to pressing problems.

Reply by Sandra Clark on 7/21/12 12:31pm
Msg #427572

Re: The lender on a reverse mortgage ...

Agree Hugh. I have seen many cases that if it wasn't for an RM, they would be on the street. I think they very well have a place in this ever changing economy

Reply by HisHughness on 7/21/12 12:16pm
Msg #427567

If the equity in a home has increased due to an increase in the property value, an RM can be refinanced just like any other mortgage to recover that equity.

Reply by MW/VA on 7/21/12 12:24pm
Msg #427568

Not a lot different than an RM signing. I've seen a no. of those loans refinanced, for those fortunate enough to see an increase in value, or didn't take out a lot of principal to begin with.

Reply by Sha/CA on 7/22/12 5:13pm
Msg #427666

Does anyone know if there must be equity now to obtain a RM?

I have also done a couple of RM refi's for the same borrower! Their equity (property value) kept increasing and they wanted the most they could get.

Reply by Shoshana/AZ on 7/22/12 7:58pm
Msg #427670

Re: Does anyone know if there must be equity now to obtain a RM?

Yes, there must be a certain amount of equity. There are reverse mortgage calculators on the ininternet that correlate equity with age.