The American Recovery and Reinvestment Act (ARRA) of 2009 set our current reverse mortgage lending limits at $625,500. This temporary increase in the HECM loan limits is set to expire September 30, 2011.
The loan limits beginning on October 1, 2011 for HECM loans are currently under review by the Federal Housing Administration (FHA). FHA will provide guidance to the industry and consumers in the near future. We are unsure as to whether or not they will stay the same or will be lowered to previous levels. Currently the limit applies to the entire country. Previously, the limits were based on where the property was located, with higher value areas having a higher limit.
What does this mean to reverse mortgage consumers?
For those seniors who are on the fence and have higher home values and higher mortgage balances should consider starting their reverse mortgage sooner than later. By using our reverse mortgage calculator, you can determine the amount of benefit currently available.
When we refer to loan limit or lending limit being $625,500, we are referring to the maximum value that we will give a property when determining loan proceeds. For example, if your property appraises for $725,000, we will calculate your benefit using $625,500. Conversely, if your home appraises below $625,500, we will use the lower value. Now, if the loan limits are lowered to $417,000, for example, we will only assign that much value when determining benefit, even if your home does appraise higher than the new limit.
To find out more details or to apply ahead of the change call us toll free at 1-888-888-4834.