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Can a Reverse Mortgage Loan be Reversed?

Reverse Your Reverse Mortgage

There are ways to "reverse"* your reverse mortgage loan.  The circumstances under which you want to do this may vary, and so will the steps you have to take.  Let's take a look at a few different situations and how to handle each.

Reversing a Reverse Mortgage Loan That Has Not Closed Yet:

If you have applied for a reverse mortgage loan, you should know that you can cancel the transaction any time up to three days after the loan closes.  You read that right...you have a 3 day right of rescission on the FHA insured reverse mortgage loan (note that this may not be the case for a purchase loan and for some of the jumbo loans).

How does it work?  If the loan has not closed yet, you simply need to tell your loan officer that you have changed your mind.  To be extra certain, you can follow up your conversation with a written confirmation.  If the loan closed within the previous day or two, you will need to sign and return the rescission form within the time-frame allowed (only 3 days after closing, so pay attention to the timing). You want to be sure the form is received by your loan officer, so following up is important. In most cases, you will not be entitled to a refund of your appraisal fee or the counseling fee.  However, it is better to forfeit these funds than to take out a reverse mortgage loan that you don't actually want.

A word of caution!  If you decide to exercise your right of rescission, make sure you are certain that is what you want to do.  Once you have cancelled the loan, you can't go back without starting all over again.

Reversing a Reverse Mortgage Loan Long After Closing:

If you have had a reverse mortgage for quite some time, that does not mean you are "stuck" with it.  In this case, you will need to pay off what is due on the reverse mortgage loan.  You can do that by refinancing the loan back into a traditional mortgage, use your own funds to pay it off, or sell the home and pay off the reverse mortgage loan (just like any other mortgage loan).

Reversing a Reverse Mortgage Loan on a House You Have Inherited:

If you have inherited a home which has a reverse mortgage loan on it, you will need to pay the amount due on the reverse mortgage loan.  Your methods for doing this would be similar to those mentioned in the paragraph above.

What if you have inherited a home with a reverse mortgage loan on it and you are old enough to get a reverse mortgage loan yourself?  Can you do that?  It depends on how much equity remains in the home.  If there is enough equity, you may be able to get a reverse mortgage loan yourself.  If you are interested in doing so, you should speak with a reverse mortgage loan officer to see if it is an option for you.

Refinancing a Reverse Mortgage Loan Using Another Reverse Mortgage Loan:

If you have had a reverse mortgage loan for a while, and you think your home has increased significantly in value, you may be able to refinance the loan into another reverse mortgage loan.  This is called a HECM to HECM refi.  You will need to talk with a loan officer to see if this is an option for you.

Do you have questions about reverse mortgage loans?  If so, call us!  855-469-7383.  Or, order our free reverse mortgage loan guide to get the most up to date reverse mortgage loan information.

*The word "reverse" in this situation can have different meanings to each individual.  This post is meant to provide guidance on how you may handle various scenarios, but it is always good to speak with your loan officer to review your individual circumstances.

About the Author Laura Funderburk

Laura Funderburk is a highly sought after reverse mortgage loan specialist in Dallas, Texas. She has focused on this specialty loan for many years and stays up-to-date on the latest trends and changes. She is known for helping retirees supplement their retirement income using a reverse mortgage loan without being pushy or overbearing.

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