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HECM Loans - New Lending Limits for Reverse Mortgages
from: Troy ShellhammerReverse Mortgages can now give you more funds than ever before
with a nationwide lending limit elevation on January 1st of
2006. Now borrowers can utilize more of their home's equity
without the burden or risk of making monthly payments, and still
leave enough value in the home for your heir's legacy.
The Reverse Mortgage is a product that will usually make
available around 30-60% of the homes appraised value in the form
of a lump sum, a monthly disbursement, a line of credit, or a
combination of the three. There are only six Reverse Mortgage
variants across the nation, a Reverse Mortgage
Lender can do comparisons. Each of these products are
designed to perform for different home values or dispersement
options. The most common Reverse Mortgage product, the FHA Home
Equity Conversion Mortgage (HECM) is the Reverse Mortgage that
is being updated with these new lending limits. This is the
Reverse Mortgage that is most commonly used because is designed
to provide the most funds possible while still using the
formulas that are used with all Reverse Mortgages in generating
a dollar figure in accordance with the available equity. These
variables include the age of the borrower, the value of the
home, the interest rate, the county the home is in, and the
lending limit.
The minimum lending limit prior to January 1st, 2006 for almost
75% of the country, was around $172,000, while the maximum for
any FHA HECM was $312,000. This meant that for most HECM
applicants, no matter how much the home was valued over
$172,000, the Reverse Mortgage generated an amount based on
30-60% of the that limit. Now that the limits have been looked
at and viewed as obsolete and unsuitable, the Reverse Mortgage
lending limits to a minimum of $200,160 and a maximum of
$362,790. In most cases of individuals applying for a Reverse
Mortgage, these increases will add up to and above $25-30,000
dollars more to your Reverse Mortgage estimate. Many individuals
who currently have a large mortgage on their home and have
looked into doing a Reverse Mortgage, but were unable to
efficiently pursue one due to the low lending limits, can now do
a re-assessment with a Reverse Mortgage Calculator and have the
opportunity to pay off their current mortgage in full.
This also means that for every person applying for a Reverse
Mortgage, the amount of tax-free funds available are 10-20%
percent higher. That will mean thousands of payment free dollars
to be used for retirement, medical bills, and investments. Most
senior's largest asset is their home, and the Reverse Mortgage
was created to allow seniors a safe way to activate that
investment without having to sell their home and move. As of
January 1st, the Reverse Mortgage will now be a much more
effective way to do that.
About the author:
Troy Shellhammer is a Reverse Mortgage specialist with Next
Generation Financial Services, a division of 1st Mariner Bank.
He advises seniors on the Reverse Mortgage process and produces
Reverse Mortgage loans nationwide. Please visit the Reverse
Mortgage Nation website at http://www.reversemortgagenation.com/
or call 1-888-9 REVERSE for any questions, information, or an
estimate on what you or your friends and relatives may receive
with a Reverse Mortgage.
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