HECM to HECM Refinance With a Non-Borrowing Spouse
If you are thinking about doing a HECM to HECM Refinance, it’s important to know FHA’s current value limits as well as your current home value. One without the other, makes it impossible to know how much money you are entitled to receive if you refinance.
For instance, if the money you are poised to receive from the refinance is less than the cost of refinancing, it is not in the homeowner’s best interest to do a HECM to HECM refinance.
One exception, however, is if you are refinancing to include a previous non-borrowing spouse on the reverse mortgage loan.
If this is the case, the borrower must write a letter explaining the following:
They acknowledge that the amount they will receive from the refinance is less than the cost of doing the HECM to HECM refinance.
They acknowledge that they are refinancing their HECM loan in order to add their spouse to the loan.
They acknowledge that they want to proceed with the transaction.
It’s important that the homeowner is well aware of the consequences of a refinance should the amount received is lower than the costs.
HECM to HECM refinancing can still be done to include a previous non-borrowing spouse, even if the amount you will receive is higher than the cost of a refinance.
Refinancing to include a non-borrowing spouse is a great way to protect your spouse’s future financial security and stability. In some instances, refinancing to include a non-borrowing (once they’ve turned 62 years of age and older) is a way to extend the life of your HECM loan.
Unless both borrowers pass away or move out of their primary residence for more than 12 consecutive months, both spouses have access to their HECM loan and are protected as borrowers under Federal Housing Administration.
Remember, even if you refinance, the HECM loan continues to be a non-recourse loan, meaning, you, the homeowner, never owes more than the current value of your home.
If you are considering refinancing your reverse mortgage, think it over, consider these questions and give PS Financial Services a call at (888) 845-6630 or email us at info@PSReverseMortgage.com. We do not pressure those who inquire, we are simply here to help.