Yes. A reverse mortgage can be refinanced into a new reverse mortgage (typically another Home Equity Conversion Mortgage, or HECM, insured by the FHA). This is called a HECM-to-HECM refinance. Private (proprietary) reverse mortgages can also be refinanced, either into another proprietary loan or into a HECM, depending on eligibility and lender offerings.
Why would someone refinance a reverse mortgage?
Common reasons include:
- Access more cash due to increased home value or lower interest rates.
- Add or remove a spouse from the loan (especially important for non-borrowing spouse protection).
- Switch loan types (e.g., from adjustable-rate to fixed-rate, or from proprietary to HECM).
- Reduce mortgage insurance premiums (if HUD lowers MIP rates).
What are the eligibility requirements for refinancing?
To qualify for a HECM-to-HECM refinance:
- The new loan must provide a net financial benefit (typically at least 5% more in principal limit after fees).
- You must have sufficient home equity (based on current appraised value).
- At least 12 months must have passed since the original reverse mortgage closed (some lenders require 18 months).
- You must meet standard HECM requirements:
- Be 62 or older.
- Occupy the home as your primary residence.
- Complete HUD-approved counseling.
How much will refinancing cost?
Costs are similar to the original reverse mortgage:
- Origination fee (capped by HUD).
- Mortgage insurance premium (MIP) – 2% upfront + 0.5% annually.
- Appraisal, title, and closing costs.
- Counseling fee (~$125).
These can often be financed into the new loan, so no out-of-pocket payment is required.
Will refinancing reset the loan term or interest rate?
Yes:
- The loan balance resets to the new amount (original balance + closing costs + new funds).
- You can choose a new interest rate structure (fixed or adjustable).
- The non-recourse protection remains (you’ll never owe more than the home’s value at repayment).
Can I refinance if my home value has decreased?
Possibly, but less likely. If your home’s appraised value has dropped, your available loan amount may be lower than your current balance, making refinancing unavailable or unbeneficial.
Can I refinance a proprietary (jumbo) reverse mortgage into a HECM?
Yes, if:
- The new HECM lending limit (2025: $1,209,750) covers your loan needs.
- You meet all HECM eligibility rules. This is common when borrowers want lower costs or spousal protection not offered in proprietary programs.
What’s the “5x rule” for HECM-to-HECM refinances?
HUD requires that closing costs must not exceed 5 times the potential savings or benefit from refinancing. Lenders use a financial assessment to ensure the refinance makes sense.
How long does the refinance process take?
Typically 45–60 days, including:
- Counseling
- Appraisal
- Underwriting
- Closing
Should I refinance my reverse mortgage?
Consult a HUD-approved reverse mortgage counselor and compare offers from multiple lenders. They’ll calculate your net tangible benefit and ensure the refinance aligns with your goals.
