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Can a HECM Be Refinanced?
Can a HECM Be Refinanced?

Yes, but whether it is advantageous to do so is another question. It depends on the refinance cost relative to the increase in credit line that is available on the current HECM. If it costs $8,000 to refinance and your credit line rises by $40,000, you probably want to do it. If it costs $8,000 but your credit line rises only by $4,000, you probably don’t. But you might, if you have zero interest in the size of your estate.

The required upfront mortgage insurance premium on a refinance is the premium on a new HECM less the upfront premium the borrower paid on the HECM originally.

The additional amount you can draw if you refinance depends on how much of your equity in the house you have already used, the extent to which your property value has changed since you took the original, interest rates now relative to then, and whether or not your original property value was higher than the FHA loan limit then. If that was the case, subsequent increases in the loan limits will increase the amounts you can draw under a refinance.

Under the law, the reverse mortgage loan provider must provide you with the total cost of the refinancing, and the increase in the amount you can draw. The counseling requirement is waived if the increase in the amount you can draw is at least 5 times as large as the refinancing cost, and less than 5 years have expired since the original transaction.