Huge Impact - New Reverse Mortgage Lending Limit Increase
George Bush signed the Housing and Economic Recovery Act on July 30. It officially went into effect on October 1st. For seniors 62 and over the law officially raised the national reverse mortgage lending limit to four-hundred-seventeen thousand dollars.
Before the new law took effect, most parts of the country had a maximum reverse mortgage lending limit of $200,160. On November 6, mortgage companies started the funding and closing of loans with the higher limits.
Those helped most by the new law are those with homes valued over the former lending limits. Banks will loan these homeowners up to twice the amount as before the law's enactment. Even better, lender fees are reduced as a percentage 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.
There is no telling when Mrs Johnson's flooring business will return to pre-2008 levels. It is a big unknown? Based upon this she opted to move forward with a reverse mortgage that completely eliminated her monthly mortgage payment. She still has a mortgage but the monthly burden is gone.
Many myths surround the reverse mortgage. One such myth is that in order to get a reverse mortgage the borrower must own their home free and clear.
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.
Before the new law took effect, most parts of the country had a maximum reverse mortgage lending limit of $200,160. On November 6, mortgage companies started the funding and closing of loans with the higher limits.
Those helped most by the new law are those with homes valued over the former lending limits. Banks will loan these homeowners up to twice the amount as before the law's enactment. Even better, lender fees are reduced as a percentage 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.
There is no telling when Mrs Johnson's flooring business will return to pre-2008 levels. It is a big unknown? Based upon this she opted to move forward with a reverse mortgage that completely eliminated her monthly mortgage payment. She still has a mortgage but the monthly burden is gone.
Many myths surround the reverse mortgage. One such myth is that in order to get a reverse mortgage the borrower must own their home free and clear.
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.
About the Author:
Learn more about the reverse mortgage at Reverse Mortgage - Texas Mortgage Pro's Advice. Another source for informations is the Texas Reverse Mortgage information and reports.
posted by Credit Counseling at
2:16 PM
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