Reverse Mortgage Loan Blog

Q: I have a reverse mortgage that I took out three years ago and am concerned as to whether these mortgages will be affected by the current housing loan situation.

A: So long as you live in the house, you need not worry about anything involving your reverse mortgage. The current mortgage meltdown will not impact you or your mortgage.

I want to use this question to report on some new reverse mortgage developments that were included in the recently enacted housing legislation. Effective Oct. 1, 2008:

1. The national loan limit goes up to $417,000, but can increase up to $625,500 in some parts of the country.

2. There are a number of protections for seniors, such as prohibitions on requiring that borrowers purchase annuities or other financial products with the proceeds they receive from their reverse mortgage.

3. You can use an FHA mortgage to purchase your home. Origination fees will be capped at 2 percent of the first $200,000 borrowed and 1 percent on the balance, with an overall cap of $6,000. This is an important change, because many of the complaints about reverse mortgages in the past have been about the high upfront costs.

For more information on reverse mortgages, go to www.aarp.org, and type in “reverse mortgages” in the search box.

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