Why You Can’t Refinance Your Reverse Mortgage Right Now (Even If Your Home Value Went Up)

When homeowners ask about refinancing their reverse mortgage, they usually expect one of two answers:

1. “Yes, you qualify — here are your numbers.”
2. “No, your home value hasn’t appreciated enough.”

But there’s actually a third option:

“You can’t refinance yet because interest rates are too high.”

That’s exactly what happened to Linda, a homeowner in her early 70s who shared her story online. She and her husband bought their home with cash six years ago, then took out a reverse mortgage to access $35,000 of their equity. Their home has appreciated significantly since then. Their age increased. Their equity increased.

Yet a lender told them they don’t qualify to refinance.

She was shocked. And frustrated.

If you feel the same way, here’s the truth — and it has nothing to do with your value, your age, or anything you did wrong.

Why Higher Home Values Aren’t Enough Anymore

On paper, it seems simple:

• You’re older
• Your home is worth more
• You should qualify for more proceeds

That’s how reverse mortgages normally work.

But reverse mortgage refinances must pass a strict federal rule called the “benefit test.” This rule isn’t optional — every lender must follow it. The test looks at:

• Your age
• Your home’s current value
• How much you owe on your existing reverse mortgage
• Current interest rates

And right now, that last one — interest rates — is the problem for many people.

The Real Reason People Fail the Refinance Test Today

Here’s what the loan officers in the Facebook conversation were trying to explain:

When interest rates rise, the amount of equity you can access shrinks — even if your home value goes up.

Reverse mortgages are built around something called the expected interest rate. The higher this rate is, the less FHA allows you to borrow as a percentage of your home’s value.

So even though:

• You’re older
• Your home appreciated
• You’ve built more equity

…a higher expected rate wipes out those gains.

That’s why one commenter said:

“This is the case for many right now… It’s this way for 99% of people in your shoes.”

And she’s right — practically everyone who got their reverse mortgage 4–8 years ago is running into this wall.

Why You Were Told You Could Refinance “After a Few Years”

Many lenders used to tell homeowners:

“In a few years, when your home value goes up and you’re older, you can refinance and get more money.”

And for nearly a decade, that was true. From 2012 to 2021, interest rates were historically low. Values soared. Seniors refinanced reverse mortgages easily and often.

No one — not lenders, not homeowners, not economists — predicted rates would skyrocket this fast or this high.

That’s why you’re hearing people say:

“No one expected the economy to worsen this dramatically so quickly.”

Why “Try Another Lender” Usually Won’t Fix It (But Sometimes Might)

You’ll see comments like:

• “Call me, I can help.”
• “Get another opinion.”
• “I do refis all day every day.”

And while it’s true that different lenders can structure things differently, none can escape the federal refinance rules.

Every lender must follow:

• FHA principal limit factors
• Financed closing cost rules
• The 5-times-benefit test
• The requirement that the new loan provides a “meaningful benefit”

If your refinance fails the benefit test because of interest rates, every lender will hit the same roadblock.

There are rare exceptions — typically when the homeowner owes very little — but they are exceptions, not the norm.

What Needs to Happen Before You’ll Qualify Again

You are not stuck permanently. This is a timing issue, not a “you’ll never qualify” issue.

You’ll qualify again when:

• Interest rates drop
• Your age increases
• Your home value continues rising
• Your existing balance doesn’t grow too quickly

The biggest factor — by far — is interest rates.

As one reverse specialist said:

“Once rates recover and dip lower you should meet the benefits tests again and be eligible to refinance.”

Historically, interest rates move in cycles. They rise, they peak, they fall. When rates fall again, thousands of homeowners currently stuck will suddenly qualify overnight.

Why It Feels Unfair (And Why You’re Not Alone)

It’s understandable to feel frustrated. You were told refinancing later was an option. Your equity is higher. Your age is higher. And now you’re hearing:

“Too bad, can’t do it.”

That doesn’t feel good — and it shouldn’t.

But you’re not alone. Homeowners across the country — even those who gained hundreds of thousands of dollars in equity — are stuck waiting for rates to ease. This is a market-wide issue, not a personal one.

One commenter put it plainly:

“You’re not alone. It’s this way for 99% of people right now.”

What a Reverse Mortgage Refinance Actually Requires

Before a lender can approve a reverse mortgage refinance, all of the following must be true:

• The new loan must pay off the current reverse mortgage.
• The homeowner must receive a minimum amount of new proceeds.
• The benefit must exceed the cost of refinancing.
• The “benefit test” must show the homeowner is gaining meaningful new equity access.
• FHA principal limit factors must allow enough loan proceeds to cover closing costs and still deliver new funds.

If rates are high, these calculations break down — even when everything else looks perfect.

So What Should You Do Now?

Here’s what makes the most sense for most homeowners:

• Wait for interest rates to fall. This is the single biggest factor that will reopen refinance eligibility.
• Monitor your monthly statements. Watch your loan balance, remaining equity, and interest accrual.
• Check your numbers every 3–4 months. A small dip in rates can change everything.
• Get a second opinion if you’re close. Some lenders structure fees differently, which can sometimes make a borderline case work.

But right now — in today’s rate environment — waiting is the most realistic path.

The Bottom Line

If you’ve tried to refinance your reverse mortgage and were told “no,” it’s not because:

• Your home didn’t appreciate
• You did something wrong
• Your lender misled you
• You’re not old enough
• Your home is too new

It’s because interest rates are historically high, and the FHA rules that protect borrowers are blocking refinances until rates come down again.

This isn’t permanent. It’s temporary — and it’s happening to almost everyone who got a reverse mortgage in the past 6–10 years.

The moment rates drop; your refinance eligibility can change overnight.

Want to Know Where You Stand?

If you’d like a clear breakdown of:

• Whether you’re close to qualifying
• How far off the numbers are
• What interest rate you’d need
• Whether a different lender structure would help
• When it makes sense to check again

We’d be happy to run the full analysis for you — no cost, no pressure.

Call 855-212-9114 or get a free instant reverse mortgage quote today.