In October, 2008, HUD announced that it has greatly increased the reverse mortgage loan limit. These new limits are a boon to senior citizens interested in receiving more retirement income, especially for those whose retirement investment portfolios have significantly declined in value. Unlike a traditional home equity mortgage, a reverse mortgage isn’t repaid until you permanently vacate your home, sell your home, or die.
Increased Reverse Mortgage Loan Limits
Prior to November 1, 2008, reverse mortgage loan limits ranged between $200,160 in regions with low home values and $362,790 in regions with the highest home values. Now there is a single loan limit of $417,000 for federally insured reverse mortgages issued through HUD’s Home Equity Conversion Mortgage program.
If you’ve already received a reverse mortgage and the value of your home is higher than the amount you received, you may qualify for a new loan with a higher limit. As always, a reverse mortgage will not be issued for an amount higher than the current value of your home, regardless of the limit. The amount you qualify to receive also depends on your age and other factors. Everyone’s situation is different, so only a reverse mortgage counselor can advise you of the actual amount you qualify to receive.
Reverse Mortgage Purchase Program
HECM loans can also be used to purchase a principal residence after January 1, 2009. These loans are subject to strict regulations and requirements, but they may be able to help you secure a safe and comfortable home to live in during retirement. Although you will be required to contribute a sizable down payment, you won’t be required to make monthly mortgage payments under this program. The down payment may not come through another loan, but may be received through approved FHA programs.
If you’re over the age of 62, you may qualify to receive a reverse mortgage or reverse mortgage for purchase loan. Other requirements and restrictions also apply. If you need additional retirement income to pay off your current mortgage, take a long-awaited trip, or simply cover daily living expenses, a reverse mortgage can help you do it. You will still own your home and the lender may not take your home from you, even if the value falls below the loan amount. Contact a reverse mortgage lender to learn more about your options. They can advise you about a prospective loan limit and explain the loan application and counseling process.
Jim Fink is an expert on reverse mortgages and other senior funding options. Visit Financial Freedom to learn more about new reverse mortgage loan limits.
