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Larger Reverse Mortgages Available to Seniors In
2006
Dec. 15, 2005 - Older homeowners will be able to
convert a greater portion of the equity in their homes into tax-free
income using a reverse mortgage starting next year because of new,
higher loan limits, the National Reverse Mortgage Lenders Association
announced today.
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Related Stories |
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Update to story:
HUD made the official announcement on Jan. 3, 2006
that the new limits are in place.
Reverse Mortgage Limits on HUD Lifted by Congress
Dec. 15, 2005 - The U.S. House of Representatives
passed legislation last night that eliminates the cap on the number of
reverse mortgages that can be insured by the Department of Housing and
Urban Development, the National Reverse Mortgage Lenders Association
announced today. Read more...
The Ins and Outs of Reverse Mortgages
By Jeffrey D. Voudrie, CFP
President,
Legacy Planning Group
Sept. 28, 2005 - Reverse mortgages have been around
since 1989, but they are rapidly gaining in popularity. The complexity
of reverse mortgages makes it difficult for the average senior to
separate myth from reality. Let me help you decide if one is right for
you.
Read
more...
More news about Reverse Mortgages
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The increases will affect two reverse mortgage
products: the federally insured Home Equity Conversion Mortgage (HECM),
which accounts for 90 percent of all reverse mortgages made in the U.S.,
and the Fannie Mae Home Keeper loan.
The loan limits for the HECM product vary by
geographic area. The highest of the loan limits—applicable generally to
major metropolitan areas—will grow from $312,896 to $362,790.
The lowest
loan limit, which generally applies to rural and non-metropolitan areas,
will grow from $172,632 to $200,160. HUD must first issue an FHA
Mortgagee Letter before the new loan limits take effect. A letter should
be forthcoming around the New Year.
Fannie Mae's national loan limit for single-family
mortgages—which includes Home Keeper loans—will rise next year to
$417,000 from the current limit of $359,650. The Home Keeper loan limit
is 50 percent higher for Alaska, Hawaii, and the U.S. Virgin Islands.
“These increases in the loan limits for the HECM
and Home Keeper products will enable seniors to access greater amounts
of equity in their homes, providing a powerful tool for addressing their
financial needs through retirement,” said Peter Bell, president of NRMLA.
Approximately 79.8 percent of the 3,226 counties
(2,575) in the U.S. are currently at the lowest HECM loan limit
($172,632). Only 104 counties, or 3.2 percent of the total, are at the
current maximum loan limit ($312,896).
The balance are somewhere in
between. While counties at the "floor" are guaranteed to rise from
$172,632 to $200,160, there is no guaranty that counties at the current
"ceiling," or in between the floor and ceiling, will rise immediately.
To view the current lending limit in your county,
go online to
https://entp.hud.gov/idapp/html/hicostlook.cfm.
A reverse mortgage is a unique loan that enables
senior homeowners (62+) to convert part of the equity in their homes
into tax-free income without having to sell the home, give up title, or
take on new monthly mortgage payments.
Borrowers can choose to receive reverse mortgage
funds as a lump sum, monthly income, or line of credit, or as a
combination of these. Borrowers can use the funds for any purpose,
including home repairs and improvements, medical expenses, in-home care,
education, and supplemental retirement income.
No mortgage payments are
due during the life of the loan. The loan becomes repayable when the
borrower sells the home or permanently moves out. In addition, the
repayment amount can never exceed the value of the home.
To educate consumers about reverse mortgages, NRMLA
has created a booklet entitled Just the FAQs: Answers to Common
Questions About Reverse Mortgages. This free booklet answers frequently
asked questions, provides detailed information on the loan origination
process, and includes a Code of Conduct for lenders, so that consumers
can know their rights when working with a lender. The booklet may be
obtained by calling NRMLA at 1-866-264-4466 (toll-free), or ordering a
copy through our web site at
www.reversemortgage.org.
About source:
NRMLA is a nonprofit trade association, based in
Washington, DC, whose mission is to support the continued evolution of
reverse mortgages as an important financial option for senior homeowners
while educating both its members and consumers about the varied
applications of this unique loan. Members sign a Code of Conduct
pledging to abide by guidelines that assure fair, ethical, and
respectful practices in offering and making reverse mortgages to
seniors. Details on NRMLA, reverse mortgages, a reverse mortgage
calculator, and a list of reverse mortgage lenders in each state are
available on NRMLA’s Web site, at http://www.reversemortgage.org/.
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