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#9 Refinancing a Reverse Mortgage to Improve Security for Spouse


Listening to neighbors discussing refinancing their mortgage loans (in order to lock in current lower interest rates) has made you think about the reverse mortgage you had taken out just three years ago on your home following your remarriage. Your husband was 60 years old at the time, three years younger than you, and became a “non-borrowing spouse”. Does the same logic about interest rates being lower now apply to reverse mortgages, you wonder, and is it therefore a good idea for you to refinance?

There are actually several reasons you might consider refinancing your reverse mortgage, with perhaps the most important being that your husband is now over age 62. As a co-borrower, should you either need to move out of the home into a care facility (or die before he does), your husband would be able to access the line of credit on the reverse mortgage. (While non-borrowing spouses are guaranteed the right to remain in the home, they have no access to the line of credit.)

The fact that both of you are now older is itself a factor in favor of a refinance, increasing the available funds available for withdrawal (either as a monthly payment or as a line of credit.

In the same manner as your neighbors, who are motivated to refinance their homes by the two factors of interest rates having fallen and home prices having increased, you can consider those factors in deciding to refinance your reverse mortgage.

Three years have passed. You’re older. The value of your home has probably increased significantly. Interest rates are lower. All these points indicate in favor of refinancing.

With all that, the most powerful reason for a reverse refinance might be the step up in spousal benefits.