HUD’s Five Times Benefit
Reverse mortgage refinance is indeed a good deal, but before you start taking this offer seriously it is best to know the underlying implications of your decision. HUD’s “Five Times Benefit” states that you have to take the sum of all the costs that you incurred to the new loan and multiply it by 5. The borrower should receive at least five times or more of this amount with the new loan over the old loan to make a good deal out of reverse mortgage finance. Otherwise, if this is not reached, then it is best to go to a reverse mortgage counselor for another counseling session to further understand the contents of reverse mortgage.
Simple Illustration of HUD’s Five Times Benefit
To free yourself of the technical terms enclosed in HUD’s Five Times Benefit, you may consider reading through this simple explanation.
If you are getting $10,000 a month on your original loan, then to get better deal you should receive no less than $50,000 on your reverse mortgage refinance. If you will only get $30,000, then it is not a great deal, since you are still going to pay for your original reverse mortgage loan. If that is the case, then you will only be left with $20,000 a month. That may be a good deal for some but not for everyone.
A change of lifestyle or financial status is one of the main reasons why borrowers consider reverse mortgage refinancing. Always bear in mind that loans are not given for free. There are costs involved in it, so it is not always wise to have your reverse mortgage refinanced. It is always best to consider your needs and economical status before closing in any reverse mortgage deal to avoid entering an unwanted reverse mortgage refinance in the future.
Related posts: