Last December, The Department of Housing and Urban Development extended the $625,500 maximum appraised value limit on Home Equity Conversion Mortgage (HECM), or the Reverse Mortgage, effective until December 31, 2013.
This represents an 150% increase over the statutory loan limit of 417,000.
Under this new extension, (which began in 2009 under the American Recovery and Reinvestment Act and has been extended for the past three years in hopes of continuing a steady economic growth) senior homeowners living in higher priced homes–above $417,000–receive significantly more money than before.
Good news for senior homeowners hoping to apply for a reverse mortgage!
The following example sums up the situation:
A borrower with a property valued at $650,000 can receive a Principal Limit of about $415,000. Under the previous (and future) limit of $417,000, that same borrower’s benefit would be about $275,000. A difference of $140,000 or 1/3 less! If there is no extension of the $625,500 value limit.
So what’s the hold up?
Whether from fear, the effects of the media or simple waiting, homeowners aren’t taking advantage of the opportunities that are ripening in the reverse mortgage market, especially coupled withlower-than-ever expected interest rates.
Expected interest rates can potentially rise above the current 5.00% though, closing the gap for homeowners looking to get the most out of their reverse mortgage program.
There has never been a better time to consider a Reverse Mortgage. There are many options available to you with a reverse mortgage and plenty of ways to use it during retirement.