Are you a senior and planned to take HECM reverse mortgage loan in the near future? If you thought the train went already, that is not true, because HUD extended the maximum limit of $ 625.500 through the end of December 2011.
HECM reverse mortgage is the only reverse loan, which is insured by FHA. This loan is the most popular reverse loan and gives seniors benefits, which no other loan cannot give. The terms are milder in case of unhappy circumstances.
HECM reverse mortgage allows a senior to change the payment option by paying only $ 20. If a senior has agreed to get the payments as monthly payments, he can change this plan and to get the money as a credit line. The alternatives are lump sum, monthly payments, credit line or a combination of some of these.
1. The Maximum Limit Extension Is Good News For The New Home Buyers.
It is allowed to buy a new home with the HECM reverse mortgage, if a senior can pay the difference between the sales price and HECM Reverse Mortgage proceeds. Because the lender will not ask the income or credit score informations, even a senior with bad credit can buy a new home, if he or she has some cash.
2. The HECM Mortgage Loan Lenders Can Underwrite For Taxes And Insurances.
This is a policy change and good news for the senior borrowers.This means, that the borrower can use reverse loan to pay insurances and taxes linked with the property, which guarantees the loan. This is a big help for the seniors, who would be in trouble otherwise.
3. $ 625.500 Limit Is Good, Because The Appraisals Are Low.
Maybe the appraisals are low, as Wall Stree Journal story said, because the mortgage market is down and lenders are cautious. However, if the appraisals would be low and the limit drawn down, it would be a cold shower to the seniors.
So this decision of HUD gives more time for the seniors. They can get three benefits: they can get the maximum loan amount of 625.500, they can get the loan with lower interest rate, because the market is still down and they can get the new house or flat with a reasonable price.
Read more about this topic:
HECM Reverse Mortgage
How To Use HECM Reverse Mortgage Loan For Home Purchase