Types of Reverse Mortgages - National Lending Limit of $625,500 Extended Through 2011! HECM Saver - Lower Closing Costs!

Stimulus Package 2009: The U.S. Department of Housing and Urban Development, HUD, raised the national FHA Reverse Mortgage lending limit to $625,500 through the end of 2010. Lobbying efforts by AARP and NRMLA, National Reverse Mortgage Lenders Association, were successful in persuading Congress to extend the limit thereby helping more borrowers obtain a Reverse Mortgage also called HECM.

Federally Insured Reverse Mortgages: The Federal Housing Administration (FHA), insures the FHA HECM product. Because of the increased lending limit to $625,500, the HECM can now accomodate homes in the jumbo category thereby giving relief to homeowners with sizeable mortgage balances. If there is enough equity in your home, current mortgage balances can be satisfied and transferred to your new Reverse Mortgage. (Note: If your home is worth over $625,500, the maximum Reverse Mortgage lending limit is still $625,500.) The loan is based on the age of the youngest borrower, rates, and home value. If your home is worth $250,000, your cash out proceeds would be lower than a home worth $550,000. However, the older you are the more proceeds you will receive. This is one time in life that the older you are the better it is!

Home Equity Conversion Mortgage options: There are two FHA HECM programs: the monthly adjustable which has the flexibility of a monthly check, a line of credit, cash out, or a combination, and the FHA HECM Fixed Reverse Mortgage.

About Fixed Rates: With a fixed rate Reverse Mortgage you are required to take all the proceeds at closing. This means if your Net Principal Limit (the amount you can borrow) is $225,000, you are required to draw the entire amount at closing. Some borrowers choose the fixed rate product because they are looking for a large cash out amount. And the fixed rate Reverse Mortgage does have an attractive interest rate. But in the final analysis, it's all about what you plan on doing with the money.

FHA HECM SAVER - Lower Closing Costs! The FHA Reverse Mortgage has gotten a face lift, and it's about time. What seniors dislike most about Reverse Mortgages are the high closing costs! HUD, however, has listened. HUD announced a new Reverse Mortgage program called the HECM Saver which took effect October 4, 2010. The proceeds to the borrower are reduced, but the good part is that the required FHA up front Mortgage Insurance premium has been substantially reduced. Mortgage Insurance is now 0.01% up front (at closing) and is then spaced out over time (1.25% of the outstanding loan balance per year.) For borrowers who are satisfied with less proceeds, the HECM Saver is a great alternative. The HECM Saver opens the door to seniors who rejected this life changing program due to the closing costs. However, for those borrowers who are looking for maximum proceeds, the HECM Standard is still the better option. Compare programs to see what is best for you. (Click here for more info on HECM Saver!)

How many Reverse Mortgages? There were 114,692 Reverse Mortgages issued in 2009 and $50,758 in 2010 (through March) which shows the growing popularity of the HECM program. We expect the program to continue to be very popular. FHA HECM production chart 1990-2010 Click here.

Reverse Mortgage Counseling Required: Reverse Mortgages require federally mandated Reverse Mortgage counseling from an independent HUD approved counselor. Counseling is required prior to your appraisal and title being ordered.

When you make your appointment for Reverse Mortgage counseling you are making it with a qualified HUD approved counselor. For more information and what to expect at HECM counseling, Click here.
 

• Free Reverse Mortgage information, call 1-888-843-9797