Reverse Mortgage Lending Limits May Drop

Congressional meetings are currently taking place that may reduce the amount of money seniors can get on a reverse mortgage. Partially due to the sudden changes in our economy a year ago, the need is being felt - some Congressman say - to cut back on the money available for reverse mortgages. As many people are aware, providing seniors with the availability of access to the money in their home's equity - and still enabling them to live in it without payments - has been a tremendous help to many. This has allowed them to continue to be self-sufficient even when money from social security and retirement funds has been reduced or even become non-existent from the recent financial crisis. Recent Bills May Reduce Limits on HECM's After proposing that the current amount of HECM's (Home Equity Conversion Mortgage) needs to be subsidized by $800 million, one Senator, Tom Latham, R-Iowa, made a proposal that the amount of a reverse mortgage loan being given should simply be less. The reason f
or making the loan less was that it would remove the need for the $800 million subsidy of the HUD program. HECM's are the only mortgages in the nation that have Federal backing. Reduction Amounts Will Probably Be at Least 5% Just how much less remains to be seen, although the amount of reduction for the reverse mortgage loans will probably be at least 5% - according to the bill proposed by the Senate. The House version of the same Bill does not have a suggested reduction in terms of a percent, but a reduction is likely. The differences will have to be ironed out in Session to see what the actual result will be. Raised Limits of Reverse Mortgages in Existence Now The amount of money that can be borrowed in a reverse mortgage is set by Law. President Obama signed the American Recovery and Reinvestment Act of 2009 last February which will raise the limit of the amount of money available per house from $417,000 to a new maximum of $625,500 for a reverse mortgage. This new amount, howeve
r, may only be good until the end of 2009. The goal of this Act is to enable seniors to be able to get a reverse mortgage who may have lost a lot of money in the economic problems of the past year. The higher value will also enable some who have higher priced homes to be able to take advantage of the opportunity to get a lower priced home with a reverse mortgage that is more in line with their retirement needs. Interest Rates Will Likely Be Rising, Too As the economy begins to take on better shape, it will also have a negative impact on new reverse mortgages. As it gets better, the reverse mortgage rate will rise along with all the other types of loans. This means that even less money will actually be going into the senior's pocket. In order to determine how much money may be available for your home, you can easily find a reverse mortgage calculator online. This will help you to discover whether or not a reverse mortgage can really be a benefit to you. You will need to have enough
equity in your home in order to be eligible, and over 62. Buying a new and smaller home will require that you buy the smaller amount of either the sale price or the appraised value - with a down payment. If you would like more information, please call (866) 683-3690 or complete our online Reverse Mortgage Calculator.        

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