Reverse Mortgage Loan Blog

Older homeowners strapped for cash could get more help through changes implemented this week in a federal reverse mortgage program.

Home values of up to $417,000 will be used nationwide as a basis for establishing the size of loans available from reverse mortgages, more than double the $200,160 that had been used across much of the country, including Nebraska.

“That is quite a bit of difference in the benefit they receive,” said Julia Craig of Family Housing Advisory Services in Omaha.

A reverse mortgage allows people ages 62 and older to obtain lines of credit or cash payments based on the equity in their homes. Repayment is not required as long as borrowers remain in their homes.

Many people seeking help at Family Housing were waiting for the change to occur before entering the program, Craig said.

The main reasons for obtaining a reverse mortgage include paying off an existing mortgage and staying in a home, paying property taxes and covering daily living expenses, Craig said.

The changes are part of the Housing and Economic Recovery Act of 2008, adopted Thursday by the U.S. Department of Housing and Urban Development.

Also new are lowered loan origination fees in the program.

“By implementing these new provisions, HUD has improved financial options for senior homeowners during a critical time,” said Peter Bell, president of National Reverse Mortgage Lenders Association.

Darryl Hicks, the association’s associate director, said his organization had argued for seven years for higher loan limits in the reverse mortgage program. The housing and economic crisis undoubtedly helped get the changes through Congress, Hicks said.

The amount of a loan depends in part on the homeowner’s age and the amount of equity in the home. Backed by the Federal Housing Administration, the loans provide ready cash.

Interest is charged on money received in reverse mortgages, but people can never owe more on the loans than the value of their home. If a home’s value is greater than the loan when the loan is repaid, the remaining value goes to the homeowner or to his or her survivors.

Found here.

Bookmark It