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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