IT'S OFFICIAL: $625,500 NEW REVERSE MORTGAGE LOAN CAP

What does today's increase in the maximum loan cap on the Reverse Mortgage mean to seniors?

In simple terms - it can add tens of thousands of dollars a homeowner can access from the equity they have in their home. And that extra equity (cash) means that many seniors will now be able to pay off their mortgages, or get enough cash from their home equity that it makes the cost of the money equitable, and gives senior homeowners the actual cash they realistically need to make life better. No monthly mortgage payments are required, but if they wish to make payments they can. But, remember, one of the most important reasons for a Reverse Mortgage is to eliminate the mortgage payment. Below are a couple of examples.

1. A couple in their late 60's (68 and 69 years of age) with a home valued at $675,000, at today's reverse mortgage interest rate of 2.973% (2.5% Over LIBOR Monthly Index of 0.437%) would get a gross loan of $425,966. If the borrower chooses a program with an interest rate based on U.S. Treasuries they would get $409,000. After deducting an equity set-aside to pay for servicing, and paying costs they would net $382,000-$396,000. These funds could be used any way they wish after any and all liens against the property, such as their current mortgage, are paid off. They would be able to take this cash as monthly payments for life, a line of credit or as a lump sum or any payment combination they desired.

Prior to today, the maximum Reverse Mortgages based on a $417,000 Loan Cap, these borrowers would get between $283,000 - $300,000.

2. An older senior man or woman living alone (80 years of age) with a home valued at $500,000 would get $379,000 to $388,000 gross loan on the new program. The net loan after all set-asides or costs would be $356,000 to $364,o00. They would be able to take this cash as monthly payments for life, a line of credit or as a lump sum or any payment combination they desired, after paying off any mortgage they might have.

On the old program they would have qualified for a gross loan of $316,500 to $323,500 depending on which program they elected, and after setting aside some equity to pay for servicing, and paying loan costs they would have netted approximately $293,000 to $301,000.

So, the new $625,500 loan cap means a significant difference for borrowers - especially in areas where homes are at the high end of home values.

If you'd like to know where you stand, please call or email me at 703/244-8151 or gloria.boone@gmail.com Thank you.

FHA Mortgagee Letter

2009-07

Raises Limits to $625,500

From NRMLA this morning: (For those of you not in the Reverse Mortgage industry, this is good news for seniors who live in areas where the home values are REALLY high...)

Mortgagee Letter 2009-07 Raises Limits to $625,500

The U.S. Department of Housing and Urban Development published Mortgagee Letter 2009-07, which officially raises the national limit for Home Equity Conversion Mortgages from $417,000 to $625,500 for the balance of 2009. The new limit took effect on the date of publication, February 24, 2009.
According to the Mortgagee Letter, HUD will allow any loan with a case number assigned prior to the publication of ML 2009-07 to close at either $417,000 or $625,500 until April 30.

Loan limits for the special exception areas of Alaska, Hawaii, Guam and the Virgin Islands have a potential higher ceiling in 2009 of $1,094,625 (1-unit), $1,401,300 (2-unit) $1,693,875 (3-unit); and $2,105,100 (4-unit). At the present time, no counties in these areas qualify for limits above the national ceiling of $729,750...

Darryl Hicks, Vice President Communications