Reverse Mortgage
Frequently Asked Questions

Can a reverse mortgage be refinanced?

Yes, homeowners age 62 and older can refinance a reverse mortgage. A refinance allows you to replace an existing Home Equity Conversion Mortgage (HECM) with a new reverse mortgage to access more home equity or improve loan terms. Seniors most often refinance when their home value has increased, FHA lending limits have risen, or current interest rates offer better long-term benefits than the original HECM.

Common Reasons Seniors Refinance a Reverse Mortgage

  • Home values have increased since the original reverse mortgage
  • FHA HECM lending limits now allow higher loan amounts
  • Lower interest rates improve loan performance and cash flow
  • Increased age of the borrower results in higher eligible proceeds
  • A desire to switch to a more flexible payout option, such as a growing line of credit

Key Benefits of a Reverse Mortgage Refinance

  • Access additional tax-free funds from home equity
  • Increase monthly cash flow or expand an available line of credit
  • Pay off the existing reverse mortgage and reset loan terms
  • Use proceeds for healthcare costs, home improvements, debt reduction, or retirement planning

Suitability and Financial Review

  • You must receive a clear, measurable financial benefit from the new reverse mortgage
  • You should compare closing costs and mortgage insurance premiums against the added value
  • You need a side-by-side analysis of the current HECM and the proposed refinance
  • You should confirm that the refinance supports your long-term retirement and financial goals

A reverse mortgage refinance can strengthen your overall financial strategy when the numbers make sense. An experienced reverse mortgage specialist can help you evaluate your options and determine whether refinancing improves your long-term financial security.

Larry McAnarney

HECM Loan Specialist

NMLS# 21059 | 815.703.4745

Contact Me Request a Quote

More Reverse Mortgage Frequently Asked Questions

Can I use a reverse mortgage to purchase a home?

Can I Buy a Home With a Reverse Mortgage? Yes — homebuyers age 62 and older can buy a home using a reverse mortgage.With an FHA-insured LifeStyle Home Loan (also called a Reverse Mortgage for Purchase or HECM for Purchase), you can purchase a primary residence without making monthly mortgage payments. Instead of paying the ... Read more

What are the basic requirements for a reverse mortgage?

Do You Qualify for a Reverse Mortgage? If you’re 62 or older and own a home, you may qualify for a reverse mortgage. An FHA-insured Home Equity Conversion Mortgage (HECM) lets eligible homeowners access their home equity with no required monthly mortgage payments, while continuing to live in the home. Reverse mortgage requirements are designed ... Read more

What if one of the co-borrowers passes away or must move out for health reasons?

What Happens If One Reverse Mortgage Borrower Passes Away or Must Move Out? If one co-borrower on a reverse mortgage passes away or permanently moves out for health reasons, the remaining co-borrower can continue living in the home with no change to the loan, as long as they continue to meet the loan requirements. This ... Read more

When will the principal and interest charges become due?

When Does a Reverse Mortgage Loan Become Due? A reverse mortgage loan becomes due only after a qualifying event occurs. With an FHA-insured Home Equity Conversion Mortgage (HECM), there are no required monthly mortgage payments as long as the borrower continues to meet the loan requirements and lives in the home as their primary residence. ... Read more

Can I refinance my existing mortgage, home equity loan, or other debts with a reverse mortgage?

Yes — you can refinance an existing mortgage, home equity loan, HELOC, or other qualifying debt with a reverse mortgage. This is one of the most common reasons seniors choose an FHA-insured Home Equity Conversion Mortgage (HECM). How Reverse Mortgage Refinancing Works A reverse mortgage refinance allows homeowners age 62 or older to: After the ... Read more

Will I be taxed on my reverse mortgage proceeds?

No — reverse mortgage proceeds are not taxable. With an FHA-insured Home Equity Conversion Mortgage (HECM), the funds you receive are loan proceeds, not income, making them a tax-free source of cash flow for seniors in retirement. Key Benefits of Tax-Free Reverse Mortgage Funds Ongoing Responsibilities Even though the funds are tax-free, homeowners must continue ... Read more

How much money can I get?

The amount you can receive from an FHA-insured Home Equity Conversion Mortgage (HECM) depends on several key factors that determine your available loan proceeds. Factors That Affect Your Reverse Mortgage Amount Lenders calculate your principal limit (maximum loan amount) based on: In general: How Existing Debt Affects Your Loan Any existing mortgage or home equity ... Read more

Will I have to pay any fees?

Yes — there are fees associated with an FHA-insured Home Equity Conversion Mortgage (HECM) reverse mortgage. However, many of these costs can be financed directly into the loan, minimizing out-of-pocket expenses for seniors. Common Reverse Mortgage Fees While these fees are similar to those of a traditional mortgage, the key difference is that most reverse ... Read more

How is a reverse mortgage different from a traditional home equity loan or line of credit?

Why Reverse Mortgages Can Be Better for Seniors A reverse mortgage is fundamentally different from a traditional home equity loan or line of credit (HELOC). Understanding these differences helps seniors safely access home equity in retirement. Key Differences Why Seniors Choose Reverse Mortgages .

How can I receive the funds from a reverse mortgage?

With an FHA-insured Home Equity Conversion Mortgage (HECM), seniors have multiple flexible ways to access reverse mortgage funds, making it a highly customizable tool for retirement. Borrowers age 62 and older can choose the option that best fits their financial goals and needs. Ways to Receive Reverse Mortgage Funds Lump Sum Payment Receive the entire ... Read more

What is a reverse mortgage?

A reverse mortgage is a specialized home loan designed for homeowners age 62 and older. It allows seniors to convert a portion of their home equity into tax-free cash without making monthly mortgage payments, providing a flexible financial tool for retirement. Unlike a traditional mortgage—where the homeowner pays the lender each month—a reverse mortgage pays ... Read more

Are interest rates fixed or variable?

With an FHA-insured Home Equity Conversion Mortgage (HECM), borrowers age 62 and older can choose between fixed or variable interest rates, depending on their financial goals and preferred method of accessing funds. Fixed Interest Rates Available when taking a lump sum at closing Offers predictable, stable interest over the life of the loan Ideal for ... Read more

Will a reverse mortgage affect my government benefits?

A reverse mortgage generally does not affect government benefits, making it a safe financial tool for seniors who rely on programs like Social Security or Medicare. How Reverse Mortgage Funds Are Treated ⚠️ Note: Large lump-sum disbursements deposited into accounts exceeding asset limits may affect programs like SSI, so careful planning or spreading payments over ... Read more

How can I use the proceeds?

Reverse mortgage proceeds can be used in many ways to enhance financial security, lifestyle, and long-term planning during retirement. With an FHA-insured Home Equity Conversion Mortgage (HECM), homeowners age 62 and older can access tax-free funds while continuing to live in their home. Common Uses for Reverse Mortgage Funds Disbursement Options Reverse mortgage proceeds can ... Read more

What has to be repaid when the loan becomes due?

When an FHA-insured Home Equity Conversion Mortgage (HECM) reverse mortgage becomes due, borrowers are required to repay only the loan balance, which includes: When Does the Loan Become Due? A reverse mortgage typically becomes due when: Non-Recourse Protection How Repayment Works Key Takeaways Understanding repayment rules helps seniors and their families plan responsibly, maintain financial ... Read more

What is a Home Equity Conversion Mortgage (HECM)?

A Home Equity Conversion Mortgage (HECM) is the most common type of FHA-insured reverse mortgage, specifically designed for homeowners age 62 and older. HECMs allow seniors to convert a portion of their home equity into tax-free cash while continuing to live in and retain full ownership of their home. Key Features of a HECM Why ... Read more

Can a reverse mortgage be refinanced?

Yes, homeowners age 62 and older can refinance a reverse mortgage. A refinance allows you to replace an existing Home Equity Conversion Mortgage (HECM) with a new reverse mortgage to access more home equity or improve loan terms. Seniors most often refinance when their home value has increased, FHA lending limits have risen, or current ... Read more