New Reverse Mortge Law Raises Lending Limits - Huge Difference
The Housing and Economic Recovery Act, signed by President Bush on July 30, most notable for its mortgage bailout provisions, also included raising the FHA national reverse mortgage lending limit to $417,000.
Before the new law took effect, most parts of the country had a maximum reverse mortgage lending limit of $200,160. On November 6, mortgage companies started the funding and closing of loans with the higher limits.
The new law allows homeowners, 62 years and older, to borrow as much as twice the amount as formerly possible. Additionally, the law provides for a relative reduction in closing costs for homes valued above $200,000.
The reverse mortgage lending limit increase has come at exactly the right time for homeowner and commercial flooring company owner Wilma Johnson. Mrs. Johnson's flooring business is one of the casualties of a bad economy. Since the beginning of 2008 flooring jobs have trailed off to next to nil, and Mrs. Johnson must concern herself more and more with simple things like paying day to day bills. Her mortgage payment alone eats into her dwindling savings at a rate of $1,450 per month.
With many unknowns in the commercial marketplace, she is unsure when her income will return. With that in mind Mrs. Johnson exercised the option to completely eliminate the burden of her mortgage payment by refinancing her home with a reverse mortgage.
One of the common misconceptions regarding senior homeowners getting a reverse mortgage is that these borrowers all must own their home with out liens or a mortgage against the home.
The facts paint a different picture. Even before the new law came into effect most reverse mortgage customers were getting reverse mortgages to pay off an existing mortgage. In effect the reduction in mortgage payment is a net increase in income.
The new law comes as a boon to many 62+ homeowners with mortgage amounts in excess of the former lending limits. Now, these same homeowners can use a reverse mortgage to pay off their mortgages to free up much needed monthly income for other life expenses.
Before the new law took effect, most parts of the country had a maximum reverse mortgage lending limit of $200,160. On November 6, mortgage companies started the funding and closing of loans with the higher limits.
The new law allows homeowners, 62 years and older, to borrow as much as twice the amount as formerly possible. Additionally, the law provides for a relative reduction in closing costs for homes valued above $200,000.
The reverse mortgage lending limit increase has come at exactly the right time for homeowner and commercial flooring company owner Wilma Johnson. Mrs. Johnson's flooring business is one of the casualties of a bad economy. Since the beginning of 2008 flooring jobs have trailed off to next to nil, and Mrs. Johnson must concern herself more and more with simple things like paying day to day bills. Her mortgage payment alone eats into her dwindling savings at a rate of $1,450 per month.
With many unknowns in the commercial marketplace, she is unsure when her income will return. With that in mind Mrs. Johnson exercised the option to completely eliminate the burden of her mortgage payment by refinancing her home with a reverse mortgage.
One of the common misconceptions regarding senior homeowners getting a reverse mortgage is that these borrowers all must own their home with out liens or a mortgage against the home.
The facts paint a different picture. Even before the new law came into effect most reverse mortgage customers were getting reverse mortgages to pay off an existing mortgage. In effect the reduction in mortgage payment is a net increase in income.
The new law comes as a boon to many 62+ homeowners with mortgage amounts in excess of the former lending limits. Now, these same homeowners can use a reverse mortgage to pay off their mortgages to free up much needed monthly income for other life expenses.
About the Author:
Learn more about the reverse mortgage at Texas Guide Book to the Reverse Mortage. Another source for informations is Home of the Texas Reverse Mortgage.
posted by Credit Counseling at
2:22 PM
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