By Tyler Plack
Tyler Plack is the Chief Executive Officer of South River Mortgage. He joined the company as a founding employee in 2017 and served as President before becoming CEO in 2026. Tyler holds an active FHA Direct Endorsement (DE) underwriting certification.
Refinancing replaces your existing loan with a new loan and adds costs.
Ask the lender to compare the current payoff, new loan costs, available proceeds, interest terms and ongoing obligations before deciding.
Already have a reverse mortgage? See whether refinancing your reverse mortgage could work for you.
In this article8 sections
Compare the costs and interest terms
A lower rate may slow future interest accrual, but costs and further advances can increase the debt.
A lower rate does not by itself establish that refinancing benefits you.
Why you may not qualify to refinance yet
A higher home value and an older age do not by themselves mean a HECM-to-HECM refinance will work. If a lender has told you that you don’t qualify yet, the reasons below are the usual ones. To see where your own loan stands, check whether refinancing your reverse mortgage could work for you.
The test a refinance has to pass
The amount you can borrow on a HECM, called the principal limit, depends on the youngest borrower’s age, the home’s value up to the FHA lending limit, and the expected interest rate. The higher the expected rate, the smaller the share of the home’s value you can borrow. A rise in rates can cancel out what you gained from getting older and from your home’s appreciation.
The new loan has to pay off your current HECM and the costs of the refinance. Within three days of your application, the lender must give you form HUD-92901, the HECM Anti-Churning Disclosure. It shows the lender’s best estimate of the total cost of the refinance, how much your principal limit would go up or down, and how much additional money would be available to you. HUD defines churning as refinancing that generates fees for the lender but provides no financial benefit to the borrower.
HUD also sets a cost test for skipping counseling on a refinance. You may waive HECM counseling only if, among other conditions, the increase in your principal limit “exceeds the total cost of the refinancing by an amount equal to five times the cost of the transaction,” and no more than five years have passed since you closed your original HECM. Source: HUD Handbook 4000.1, section II.B.8.b, HECM Refinance.
Why you were told you could refinance “after a few years”
When expected rates were low, age and appreciation alone often produced a larger principal limit a few years after closing, so refinancing later was a common expectation. That only holds if rates cooperate. If expected rates are higher now than when you closed, the new principal limit may be close to, or below, what you already owe plus the cost of the new loan.
Why trying another lender usually won’t change the result
Every lender uses the same HUD principal limit factors and gives you the same HUD-92901 disclosure. Lenders can differ on the costs and margins they set, which can matter when a refinance is close. They can’t change how age, home value and the expected rate set your principal limit.
What needs to change before you may qualify
- Expected interest rates fall.
- The youngest borrower gets older.
- Your home’s appraised value rises, up to the FHA lending limit.
- Your principal limit grows faster than your loan balance.
Ask a lender to rerun the numbers when one of these changes. Your monthly statement shows your current loan balance.
What Is a Reverse Mortgage?
Before diving into the specifics of refinancing, let’s briefly review what a reverse mortgage is. A reverse mortgage allows homeowners aged 62 or older to access the equity in their homes without making monthly mortgage payments. Instead, the lender makes payments to the homeowner, and the loan is repaid when the homeowner sells the home, moves out, or passes away.
The most common type of reverse mortgage is the Home Equity Conversion Mortgage (HECM), which is insured by the Federal Housing Administration (FHA). There are also jumbo reverse mortgages for homes that exceed the FHA limits.
Check eligibility and counseling requirements
Ask the lender which eligibility and counseling requirements apply to the proposed loan.
For questions about your existing account or a payoff statement, contact your current servicer.
Check your eligibility
A few details to help us understand your options.
The Refinancing Process: Step-by-Step
Refinancing a reverse mortgage involves several steps:
1. Assess Your Financial Situation: Before refinancing, make sure you understand your financial needs and goals.
2. Find a Lender: Not all lenders offer reverse mortgage refinancing. It’s important to find one that specializes in reverse mortgage products.
3. Appraisal: Your lender will schedule an appraisal to determine your home’s current market value.
4. Review Terms and Fees: Make sure to review the new loan terms and associated fees. These could include new closing costs, administrative fees, and possibly higher loan balances.
5. Close the Loan: If you decide to proceed with refinancing, you’ll go through the closing process, which includes paying any fees and signing the new loan documents.
Questions to Ask Before Refinancing
Before moving forward, it helps to answer a few key questions:
- How much more money would I receive under a refinance?
- Are interest rates today better or worse than when I first applied?
- Do I want a different payout method, such as a line of credit?
- Will refinancing increase my long-term loan balance?
- How long do I plan to stay in my home?
These questions can help you determine whether refinancing moves you closer to your retirement goals.
Discuss a new-loan comparison
Considering a new loan: contact SRM
For a new reverse mortgage, request a personalized quote from South River Mortgage.
Frequently asked questions
How do I compare refinancing with my current loan?
Refinancing replaces your existing loan with a new loan and adds costs.
Ask the lender to compare the current payoff, new loan costs, available proceeds, interest terms and ongoing obligations before deciding.
A lower rate may slow future interest accrual, but costs and further advances can increase the debt.
A lower rate does not by itself establish that refinancing benefits you.
Which eligibility and counseling requirements apply?
Ask the lender which eligibility and counseling requirements apply to the proposed loan.
Who can help with my current account or payoff statement?
For questions about your existing account or a payoff statement, contact your current servicer.
Use our reverse mortgage calculator to explore your options, or call 844-230-6679. No pressure. No obligation.
