Additional Mortgages

A reverse mortgage is a first mortgage; that is, once the house is sold, the reverse mortgage lender is the first one to be paid. Any other mortgages that exist against the property must be second mortgages that are subordinated to the reverse mortgage.

If you have an existing mortgage on your home but still wish to get a reverse mortgage, it is still possible. In most cases, a portion of the funds you receive from the reverse mortgage will be used to pay off existing mortgages, and you will then have the balance to use as you see fit, either as an additional lump sum or in monthly payments paid directly to you.

In some cases, if there is another lender involved, you may not have to pay off the mortgage if that lender is willing to subordinate their loan to the reverse mortgage. Most lenders, however, would not be willing to do this. Some state or local government lending agencies may be willing to take a subordinate position. A lender’s willingness to subordinate a loan may depend on your own credit history and ability to pay, and the size of the loan to be subordinated.

Although in some unusual cases, for example, the mortgager opts to take a subordinate position on an existing mortgage, taking out a new second mortgage on a property that already has a reverse mortgage is usually not possible. If you find yourself in need of additional funds however, you may be able to refinance your reverse mortgage to meet your needs, if the interest rates have dropped or your home has increased in value since you took out your first reverse mortgage.