In a recent meeting of groups related to the reverse mortgage industry, it was decided that seniors applying for future reverse mortgages would have them reduced by 10%. The agencies involved were the National Reverse Mortgage Lenders Association (NRMLA), the AARP, and the FHA.
Reverse Mortgage Reduction Due to Needed Subsidization
The meeting was a response to two bills proposed in Congress – a House and a Senate version of the same bill. Both sides of Congress have presented their own version of a bill which is designed to either prevent or minimize the subsidization of the amount needed to meet the shortfall this coming year for new reverse mortgages.
The subsidy amount needed was $798 million. The House version offers no subsidy at all, and the Senate version only offered $288 million for a subsidy. Both versions called for a reduction between five (Senate) and ten percent (House).
Lending Limits Were Recently Raised
At the present time, the lending limit for a Home Equity Conversion Mortgage (HECM), or reverse mortgage, stands at $625,500 through the end of 2009. This means that an individual or couple can receive up to this amount if they get a reverse mortgage on their home. The previous amount was $417,000. The figure was raised to permit those who had suffered severe financial loss during the recent economic crisis to be able to get a reverse mortgage, pay off the balance they still owed to the bank on their home, and then downsize to a smaller home.
The announcement of the 10% reduction of the money available in a new reverse mortgage came from HUD in the Mortgagee Letter 09-34. The Letter indicated that any new reverse home mortgage would be reduced by 10% if it is dated after the deadline of October 1, 2009. Any applications received prior to that time, should be able to receive standard amounts.
Reverse Mortgages Are Easy to Get
A new reverse mortgage is rather easy for seniors to get. There are only two requirements. The applicants must be at least 62 years old, and they have to owe less on the house than what they have in equity.
Reverse mortgage loans are an excellent way for a senior to have a cash flow throughout their retirement years. It also enables them to retain their home and be able to live in it, as well. Money can be made available to keep the home in good shape and may even be used to remodel it, is desired.
More Money Is Available from Reverse Mortgages in Later Years
A senior reverse mortgage can be obtained at any time after the basic requirements are met. One possible advantage of waiting, however, is that larger payments can be received each month when the borrower is older. This is because the money does not need to be stretched out over a longer period of time.
Reverse Mortgage Money Can Be Distributed According to Your Plan
Money can be received in more than one way, which allows the senior to adjust how the money is to be distributed during their lifetime. Money can be given through lump sum amounts, through monthly payments for a limited time or for life, or through a line of credit. Combinations of the methods are also possible.
In order to determine whether or not a reverse mortgage is in your best interest, you can start out by using a reverse mortgage calculator. This will give you a very good idea of about how much money could be available to you.