Many Seniors Welcome New Law Raising Reverse Mortgage Limits
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 act primarily helps senior homeowners, who own homes valued in excess of $200,160. In fact these homeowners can borrow as much as twice the amount as before. As an added bonus the closing costs on the higher loan amounts have reduced as a percentage of the value of of the home.
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.
Mrs. Johns saw her income cut in thirds since the commercial market collapsed. She is unsure when things will turn around. With the new lending limits in place she chose to get a reverse mortgage to refinance her old forward mortgage. She now has breathing room without the big mortgage payment.
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 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.
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.
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 act primarily helps senior homeowners, who own homes valued in excess of $200,160. In fact these homeowners can borrow as much as twice the amount as before. As an added bonus the closing costs on the higher loan amounts have reduced as a percentage of the value of of the home.
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.
Mrs. Johns saw her income cut in thirds since the commercial market collapsed. She is unsure when things will turn around. With the new lending limits in place she chose to get a reverse mortgage to refinance her old forward mortgage. She now has breathing room without the big mortgage payment.
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 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.
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:
Learn more about the reverse mortgage at Reverse Mortgage - Texas Mortgage Pro's Advice. Another source for informations is the Reverse Mortgage of Texas Info Depot.
posted by Debt Consolidation Loan at
2:07 PM
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