NEW Reverse Mortgage Limits announced by FHA

Oct. 3, 2008 - PRLog -- The new reverse mortgage lending limits were announced today by FHA Commissioner, Brian Montgomery.  The new nationwide limit is to be $417,000 and the target effective date is November 1st.  That's a target date, not a set deadline.

This is really important information and may come as a relief to many senior households that are concerned about their ability to obtain access to cash or credit in this very troubled marketplace.  The first group that will see this as great news were the folks that looked into getting a reverse mortgage but were short to close if their county lending limit was limiting their access, meaning they would have needed to come to the closing with cash; something they were short of to begin with.  Roughly 60% of seniors originating reverse mortgages are paying off other mortgage debt to free up monthly cash flow.  Some found that falling home prices did not allow them enough equity to pay their old mortgage off and they continued to suffer while this bill was negotiated knowing there was a silver lining in the cloud...behind a cloud.

If your home is worth more than the current limits for your county, you could be looking at quite an increase in available access to cash from your home's equity.

Please see the example above.
(Please click on the link below to see the picture above better):

http://www.reverse-mortgage-information.org/images/Compar...

A 70 year old in a county with FHA lending limit of $248,588 will be able to get access to somewhere around $150,000 if their home is worth more than or equal to the current lending limit.  With the new limit they could get access to as much as $260,000 if their home was over the new $417,000 limit.  That's a 73% increase in available to cash to that homeowner.

A 70 year old in a home worth more than the FHA lending limit of $362,790 could see a 15% increase in available access to equity: going from $222,000 to just over $257,000.

Every instance will be different but if your home is worth more than the current FHA county lending limit, you will now have access to additional equity, even for those interested in refinancing reverse mortgages already in place where lending limits were significantly lower than the tentative limit of $417,000.

We'll keep you updated as more information is made available to the industry.  This is very welcome news for those that have been sitting on the fence.  This limit increase should also help lock in principle limits in places where home values continue to decrease.

For the full article please see http://www.reverse-mortgage-information.org/632/reverse-m...

Please see http://www.Reverse-Mortgage-Information.org for more information regarding Reverse Mortgages

# # #

Reverse-Mortgage-Information.org is a website dedicated to providing senior homeowners with the tools, news and other reverse mortgage information resources needed to make an informed decision.