How can you reduce your mortgage payment when in a reverse mortgage?

Asked by Chrissy, Albany, NY Tue Aug 24, 2010

I have looked into refinancing our home twice now. Our current rate is 7.9% for a 30 year fixed. It seems the value of our home has gone down, and can not refinance because our house is worth less than the payoff. I've spent hundreds of dollars (nonrefundable) to find this out. Refinancing reduces our payments and we currently are current on our where is the loss when this makes it easier for us to repay?

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LuAnn Simmons’ answer
LuAnn Simmons, , Delmar, NY
Wed Jul 27, 2011
Hi Chrissy,

I'm not sure we are on the same page when you say reverse mortgage so let me clarify. A reverse mortgage is a type of mortgage that someone takes out when they have equity in their home and they say to the bank - My house is worth xyz - I want you to start making payments to me based on the equity I have in my home.

I don't think that's what you meant in your question but just tell me if I'm wrong. I think you're asking how to reduce your mortgage payment when you owe more than your house is worth? Unfortunately, the answer is that you can't. Many people are in this situation right now. They purchased at the peak of the market. The value of their home dropped. The interest rates dropped. Then they find that they can't get the lower rate because of the value of their home. The reason the bank won't refinance is because they have underwriting guidelines that tell them to avoid high risk. When you're asking to borrow more money than your house could be sold for, they see big red flags and say no. They allowed you to borrow that amount before because at that time, your house was worth the amount they were lending.

I would like to talk more to you about your specific situation and how far upside down you are on your mortgage. If you have some equity, just not enough for their guidelines, I may be able to help. If you have zero equity and really owe more than your home could sell for, then I could give you some advice depending your personal situation. Give me a call at (518) 591-4629 to go over the specifics of your situation.

Kind Regards,
1 vote
barbara_shaf…, Both Buyer And Seller, New York, NY
Wed Sep 18, 2013
Reverse mortgages allow senior homeowners to borrow money by using their primary residence as collateral without having to sell their home. Unlike a regular mortgage, reverse mortgages don't require monthly principal and interest payments. Instead, the loan and accrued interest are repaid when the borrower:
Sells the home.
Permanently moves from the home.

Until then, the borrower retains the title to the home — and the responsibility for property taxes, insurance and repairs. Over time, the borrower's equity gradually falls as interest on the loan grows — unless the house appreciates faster. Even if the equity falls to zero, borrowers can keep their homes as long as they like, and lenders have no claim on any asset other than the home itself.………………
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