Huge Impact - New Reverse Mortgage Lending Limit Increase
Many homeowners were accutely aware of the Housing and Economic Recovery Act signed by George Bush on July 30. The act was a media magnet as it sought to bail out the ailing mortgage industry. A little talked about portion of the Act also raised the national reverse mortgage lending limits to $417,000.
Prior to the enactment of the new law, FHA reverse mortgage limits maxed out at roughly $200,000 for most parts of country. In November, lenders began to fund reverse mortgages with the new limits in mind.
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.
There is no telling when Mrs Johnson's flooring business will return to pre-2008 levels. It is a big unknown? Based upon this she opted to move forward with a reverse mortgage that completely eliminated her monthly mortgage payment. She still has a mortgage but the monthly burden is gone.
A perception exists in the marketplace that the typical reverse mortgage customer owns their home free and clear and gets a reverse mortgage to supplement income.
The truth is that well over sixty percent of senior candidates for a reverse mortgage are looking into it for the express purpose of paying off a current forward mortgage. They have the same issue as Mrs. Johnson. The mortgage payment is difficult to handle.
With the new lending limits in place many senior borrowers will realize a dramatic increase in their monthly income. Technically speaking they won't see income increasing, rather the giant expense of the mortgage payment will be eliminated. The borrower sees that as a net increase in disposable income to be used for other important life reasons.
Prior to the enactment of the new law, FHA reverse mortgage limits maxed out at roughly $200,000 for most parts of country. In November, lenders began to fund reverse mortgages with the new limits in mind.
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.
There is no telling when Mrs Johnson's flooring business will return to pre-2008 levels. It is a big unknown? Based upon this she opted to move forward with a reverse mortgage that completely eliminated her monthly mortgage payment. She still has a mortgage but the monthly burden is gone.
A perception exists in the marketplace that the typical reverse mortgage customer owns their home free and clear and gets a reverse mortgage to supplement income.
The truth is that well over sixty percent of senior candidates for a reverse mortgage are looking into it for the express purpose of paying off a current forward mortgage. They have the same issue as Mrs. Johnson. The mortgage payment is difficult to handle.
With the new lending limits in place many senior borrowers will realize a dramatic increase in their monthly income. Technically speaking they won't see income increasing, rather the giant expense of the mortgage payment will be eliminated. The borrower sees that as a net increase in disposable income to be used for other important life reasons.
About the Author:
Discover more solid information at theMortgage Pro's Guide to the Texas Reverse Mortgage. More supplemental info can be found at the Texas Reverse Mortgage information and reports.
posted by Debt Consolidation Loan at
2:23 PM
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