Huge Impact - New Reverse Mortgage Lending Limit Increase
Many homeowners were accutely aware of the Housing and Economic Recovery Act signed by George Bush on July 30. The act was a media magnet as it sought to bail out the ailing mortgage industry. A little talked about portion of the Act also raised the national reverse mortgage lending limits to $417,000.
The former limit for most parts of the country was $200,160. As of November 6, 2008 reverse mortgage lenders began funding reverse mortgages with the new lending limits.
The new law allows homeowners, 62 years and older, to borrow as much as twice the amount as formerly possible. Additionally, the law provides for a relative reduction in closing costs for homes valued above $200,000.
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.
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.
Contrary to this belief the majority of seniors are getting reverse mortgages specifically to remove the financial burden of their current mortgage payment. Fixed incomes and increased medical and other living costs are forcing a choice for many seniors.
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.
The former limit for most parts of the country was $200,160. As of November 6, 2008 reverse mortgage lenders began funding reverse mortgages with the new lending limits.
The new law allows homeowners, 62 years and older, to borrow as much as twice the amount as formerly possible. Additionally, the law provides for a relative reduction in closing costs for homes valued above $200,000.
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.
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.
Contrary to this belief the majority of seniors are getting reverse mortgages specifically to remove the financial burden of their current mortgage payment. Fixed incomes and increased medical and other living costs are forcing a choice for many seniors.
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 Debt Consolidation Loan at
2:04 PM
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