This is a fantastic opportunity for folks to get into a reverse mortgage without having to pay any additional fees, and under the current principle limits that will allow clients to leverage more of the equity from their home.
Detroit, MI (Vocus) September 18, 2010
The Department of Housing and Urban Development (HUD) and the Federal Housing Administration (FHA) have recently announced upcoming changes to its reverse mortgage program, which is insured by the federal government.
According to One Reverse Mortgage, the nation’s third largest reverse mortgage lender, on October 4, the limit on how much equity can be taken through a reverse mortgage will decrease between 1 and 5 percent based on the client’s age.
Along with the changes to the loan limits, the mortgage insurance premium (MIP) will raise from .5 percent to 1.25 percent. The MIP is the insurance costs on a loan that protects FHA should the home not sell for at least the balance of the reverse mortgage.
“Anyone considering a reverse mortgage will really benefit by beginning the process soon,” said Jay Farner, CEO of One Reverse Mortgage. “This is a fantastic opportunity for folks to get into a reverse mortgage without having to pay any additional fees, and under the current principle limits that will allow clients to leverage more of the equity from their home.”
While the changes are not as dramatic as the 10 percent increase that was made in 2009, these small changes were made to ensure the program remains in a good position to meet with the increased demand for the reverse mortgage product. HUD Deputy Assistant Secretary Vicky Bott stressed that the changes are enhancements to make the program sustainable.
In addition to the above changes, HUD is in process of implementing an updated counseling program for new reverse mortgage clients which went into effect on Sept. 11. All new clients are required to attend a counseling session with an independent, HUD-approved reverse mortgage counselor. Under the updated terms, counselors will be required to review loan disclosures with a client, as well as utilize new financial tools to determine if the homeowner will be able to meet their financial obligations after obtaining the reverse mortgage.
A reverse mortgage is designed to help home owners age 62 and older convert the equity in their home into tax-free cash, while eliminating monthly mortgage payments. Through the loan program no payment is required until the client no longer lives in the home. If the balance due exceeds the value of the home, the MIP paid on the loan covers the balance. Reverse mortgage clients may receive payments in a lump sum, line of credit or as monthly payments to use however you wish.
Consumers interested in reverse mortgages can learn more at http://www.onereversemortgage.com or by calling a mortgage banker at 800-401-8114. One Reverse Mortgage proud to be a partner company of Quicken Loans – America’s Home Loan Experts.