The Housing and Economic Recovery Act, signed by President Bush on July 30, most notable for its mortgage bailout provisions, also included raising the FHA national reverse mortgage lending limit to $417,000.
Prior to the enactment of the new law, FHA reverse mortgage limits maxed out at roughly $200,000 for most parts of country. In November, lenders began to fund reverse mortgages with the new limits in mind.
The act primarily helps senior homeowners, who own homes valued in excess of $200,160. In fact these homeowners can borrow as much as twice the amount as before. As an added bonus the closing costs on the higher loan amounts have reduced as a percentage of the value of of the home.
For homeowner Wilma Johnson, a part owner in a struggling commercial flooring company, the cavalry arrived just in time. At 64, her business was humming along until the commercial market slumped at the beginning of 2008. Now, jobs are harder to come by and she struggles to pay her monthly bills. Like most Americans, Mrs. Johnson's mortgage payment is her largest bill. Her $220,000 mortgage eats up close to $1,500 of her monthly take home income.
With many unknowns in the commercial marketplace, she is unsure when her income will return. With that in mind Mrs. Johnson exercised the option to completely eliminate the burden of her mortgage payment by refinancing her home with a reverse mortgage.
A perception exists in the marketplace that the typical reverse mortgage customer owns their home free and clear and gets a reverse mortgage to supplement income.
The facts paint a different picture. Even before the new law came into effect most reverse mortgage customers were getting reverse mortgages to pay off an existing mortgage. In effect the reduction in mortgage payment is a net increase in income.
With the new lending limits in place many senior borrowers will realize a dramatic increase in their monthly income. Technically speaking they won't see income increasing, rather the giant expense of the mortgage payment will be eliminated. The borrower sees that as a net increase in disposable income to be used for other important life reasons. - 15224
Prior to the enactment of the new law, FHA reverse mortgage limits maxed out at roughly $200,000 for most parts of country. In November, lenders began to fund reverse mortgages with the new limits in mind.
The act primarily helps senior homeowners, who own homes valued in excess of $200,160. In fact these homeowners can borrow as much as twice the amount as before. As an added bonus the closing costs on the higher loan amounts have reduced as a percentage of the value of of the home.
For homeowner Wilma Johnson, a part owner in a struggling commercial flooring company, the cavalry arrived just in time. At 64, her business was humming along until the commercial market slumped at the beginning of 2008. Now, jobs are harder to come by and she struggles to pay her monthly bills. Like most Americans, Mrs. Johnson's mortgage payment is her largest bill. Her $220,000 mortgage eats up close to $1,500 of her monthly take home income.
With many unknowns in the commercial marketplace, she is unsure when her income will return. With that in mind Mrs. Johnson exercised the option to completely eliminate the burden of her mortgage payment by refinancing her home with a reverse mortgage.
A perception exists in the marketplace that the typical reverse mortgage customer owns their home free and clear and gets a reverse mortgage to supplement income.
The facts paint a different picture. Even before the new law came into effect most reverse mortgage customers were getting reverse mortgages to pay off an existing mortgage. In effect the reduction in mortgage payment is a net increase in income.
With the new lending limits in place many senior borrowers will realize a dramatic increase in their monthly income. Technically speaking they won't see income increasing, rather the giant expense of the mortgage payment will be eliminated. The borrower sees that as a net increase in disposable income to be used for other important life reasons. - 15224
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Learn more about the reverse mortgage at Mortgage Pro's Guide to the Texas Reverse Mortgage. More supplemental info can be found at the Texas Reverse Mortgage information and reports.
