Reverse Mortgage Cons

The new lending limits for Reverse Mortgages are now in effect.    Any Reverse Mortgages that get started after today will be able to participate in the most important change in the history of government sponsored Reverse Mortgages.

These Reverse Mortgage lending limits mean that your home will be able to have its entire value taken into account when recieving your Reverse Mortgage proceeds.  The minimum lending limit set for the entire nation is $417,000.  This means that if your home appraises for $450,000 only $417,000 of the value will be included in the system.  This is standard for every lender in the nation, as the Reverse Mortgage is Federally regulated program.

This is a vast improvement to the program.  Before these changes the minimum was as low as $200,000 and the Reverse Mortgage was not a realistic option for many seniors looking to improve their retirement.

With the passing of The Housing and Economic Recovery Act of 2008, new Reverse Mortgage lending limits are set to take effect at the end of the year.  This will mean that more money for individual homes will be available.

With the end of IndyMac bank as a Reverse Mortgage Lender and their remittance of the Financial Freedom Jumbo Cash Advantage, there has been a definite need for product that will perform for large value homes.  This new lending limit provision in the Housing Act will allow for the HECM to give a much greater percentage of the home’s appraised value.

You will be able to enjoy these new lending limits either at the end of November or perhaps at the end of December 2008

As of August 2008, FHA Registration has raised the local lending limit for the HECM Reverse Mortgage Product. While many people will not be affected by this momentous change, a great number of people will receive a huge increase in the amounts of available funds for their Reverse Mortgage. Borrowers will no longer be handicapped by low home values that restrict their true amount of funds.

Most homes that are over $200,000 will see an increase in available funds rise anywhere from 20 to 80% from this new limit change. There are Cons. The increase in limits will be enacted in January. They may also mean Higher Closing Costs.

However, most of the changes that the new FHA HUD Lending Limits will be very positive. They will help fill the void left by the Jumbo Reverse Mortgage ending. It will allow higher value homes to have a proper porportion of funds available.

When IndyMac bank went into chaos, one side effect was that their Reverse Mortgage division, Financial Freedom, pulled their Jumbo Reverse Mortgage out of circulation. The Financial Freedom Cash Advantage was the only jumbo loan program in the nation.

By Jumbo loans, I mean, a loan program that is designed to preform for home values of 600,000 and up. The HECM is a fine product but would not provide a comparable percentage of equity. It was just too low.

The good news is that there is now a ray of hope. The US Senate just passed a huge FHA housing bill that will allow for an across-the-board raising of lending limits. This means that higher value homes will now be able to take out more equity with a Home Equity Conversion Mortgage, or a Reverse Mortgage to us common folks. It should help bridge the gap until someone invents a new jumbo program for us. (I hope its really soon!)

Some people feel very good about their Reverse Mortgage. Others…

I beleive that this couple would be more apt to discuss the Cons of Reverse Mortgages instead of the Pros of Reverse Mortgages!!!

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Some will say that a major con to obtaining a reverse mortgage is the fees that are involved in the transaction.

For example, the loan fees associated with reverse mortgages are higher than those of most conventional mortgages. That’s because most reverses require mortgage insurance in the event the senior outlives the value of the home. Financial Freedom pioneered a no-fee jumbo reverse that satisfied some of the higher-end customers while the federally insured Home Equity Conversion Mortgage also made huge strides in reducing fees and improving a once-bulky process.

These fees are however rolled in to the transaction so this is not an out of pocket expense the senior home owner.

For a full breakdown of fees associated, please call 1-888-973-8377.

Welcome to Reverse Mortgage Cons.

This site is dedicated to showing the Pros and the Cons of the Reverse Mortgage process. This site will show the benefits and the shortcomings of the process. The most important thing to remember of about Reverse Mortgages is that while this is a superior senior service that can benefit many seniors in financial need or create a terrific tax free source of investment capita for a better retirement, the Reverse Mortgage is not for everyone.

This site will post multiple links on information about the process, fees, structure, and closing of a Reverse Mortgage and will also outline several ways to best utilize the funds produced by the product. It will also illuminate some of the areas that senior borrowers will need to be well informed of, and some areas that will need to be avoided when conducting a transasciton of this sort.

Any questions can be answered very easily by calling 1-888-973-8377. Thank you!