Seniors counting on securing the most money they can from a reverse mortgage need to act now while interest rates are low and loan limits are high, according to Jim Cory from Legacy Reverse Mortgage.
The amount of cash available to homeowners through a reverse mortgage is limited by federal regulations. For now, the Federal Housing Administration (FHA) has decided to leave the limit at $ 625,500, but industry experts believe that could change come next year.
In response to the financial crisis, the FHA raised the maximum amount a reverse mortgage borrower’s property value could be calculated at from $ 417,000 to the current level in February 2009. FHA officials had previously announced that loan maximums would revert back to pre-February levels on October 1, 2011.
However, they now say the higher limit will likely remain in place at least through the end of the year.
October 1 is the beginning of the government’s fiscal year. Historically, officials make changes to many programs effective that day. So there is a possibility for seniors counting on maximizing the amount of money they can receive could be in for a disappointment if they wait too long.
Many industry experts expect to see a number of changes from FHA in the next six to twelve months.
These same industry experts believe that by acting now while interest rates are at records lows, reverse mortgage borrowers will maximize their options.
Regulatory uncertainty is only one factor driving seniors to consider locking in a reverse mortgage sooner rather than later. Low interest rates allow homeowners to unlock the most equity from their homes, while 10-year Treasury notes, a key industry benchmark rate, sit at historic lows.
In many areas, home values are continuing to decline. Since reverse mortgages limits are contingent on property appraisal amounts, borrowers are looking to lock in higher values before the real estate market gets potentially any worse.
The industry is doing all it can to help keep the higher loan limits so that seniors can get the most benefit from their homes.
Peter Bell, president of the National Reverse Mortgage Lenders Association has said, “We’re glad to see FHA take this interim step. It eliminates uncertainty for loan applicants who might have been concerned about not getting their loans before the limits possibly dropped.”
The focus now, according to Peter, will be on persuading HUD and lawmakers to retain the higher limit beyond calendar year 2011.
Since loan limits vary in some parts of the country, it’s also important that seniors considering a reverse mortgage contact a loan specialist to learn about the specific benefits available for their unique situation.
If you’re a California senior interested in learning more about securing the most money your home equity can afford you through a reverse mortgage, please take a moment today to call and speak with a Legacy Reverse Mortgage representative by dialing (800) 991-4613.
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