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Reverse Mortgage Caps Increased

Wed, 01/10/2001 - 1:00am — Karen Stevenson
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Seniors can obtain larger reverse mortgages in 2001 because of higher new loan limits. The increases are for two different reverse mortgage products: the federally insured Home Equity Conversion Mortgage (HECM) and the Fannie Mae Home Keeper loan.

Fannie Mae recently announced that its loan limit for single-family mortgages ? which includes Home Keeper loans ? will rise in 2001 from $252,700 to $275,000. The loan limit is 50% higher for Alaska, Hawaii, and the U.S. Virgin Islands. The loan limits also increased in 2001 for the HECM product, a reverse mortgage insured by the Federal Housing Administration of the U.S. Department of Housing and Urban Development (HUD). The HECM loan limit varies by geographic area. In 2001, the highest of the loan limits ? applicable generally to metropolitan areas ? increased from $219,849 to $239,250. The smallest loan ceiling, which generally applies to rural and non-metropolitan areas, increased from $121,296 to $132,000.

A reverse mortgage is a unique loan that enables senior homeowners to convert part of the equity in their homes into tax-free income without having to sell the home, give up title, or take on a new monthly mortgage payment. Reverse mortgages are available to individuals 62 or older who own their home. Funds obtained from the reverse mortgage are tax-free.

Borrowers can choose to receive the reverse mortgage funds as a lump sum, monthly income (for up to life), or line of credit, or as a combination of monthly income and line of credit. No mortgage payments are due during the life of the loan. Borrowers can use the funds anyway they wish ? for home repairs and improvements, medical costs, in-home care, education, and supplemental retirement income. Borrowers make no monthly payments on a reverse mortgage during its term. The loan becomes repayable when the borrower sells the home or permanently moves out. In addition, the repayment amount can't exceed the value of the home.

To educate consumers about reverse mortgages, the National Reverse Mortgage Lenders Association (NRMLA) has created the Guide to Reverse Mortgages. This free booklet answers frequently asked questions, provides detailed information on the loan origination process, and includes a Code of Conduct for lenders, so that consumers can know their rights when working with a lender. The booklet may be obtained by calling NRMLA at 1-866-264-4466 (toll-free) or 202-939-1792.

Seniors can obtain larger reverse mortgages in 2001 because of higher new loan limits. The increases are for two different reverse mortgage products: the federally insured Home Equity Conversion Mortgage (HECM) and the Fannie Mae Home Keeper loan.

Fannie Mae recently announced that its loan limit for single-family mortgages ? which includes Home Keeper loans ? will rise in 2001 from $252,700 to $275,000. The loan limit is 50% higher for Alaska, Hawaii, and the U.S. Virgin Islands. The loan limits also increased in 2001 for the HECM product, a reverse mortgage insured by the Federal Housing Administration of the U.S. Department of Housing and Urban Development (HUD). The HECM loan limit varies by geographic area. In 2001, the highest of the loan limits ? applicable generally to metropolitan areas ? increased from $219,849 to $239,250. The smallest loan ceiling, which generally applies to rural and non-metropolitan areas, increased from $121,296 to $132,000.

A reverse mortgage is a unique loan that enables senior homeowners to convert part of the equity in their homes into tax-free income without having to sell the home, give up title, or take on a new monthly mortgage payment. Reverse mortgages are available to individuals 62 or older who own their home. Funds obtained from the reverse mortgage are tax-free.

Borrowers can choose to receive the reverse mortgage funds as a lump sum, monthly income (for up to life), or line of credit, or as a combination of monthly income and line of credit. No mortgage payments are due during the life of the loan. Borrowers can use the funds anyway they wish ? for home repairs and improvements, medical costs, in-home care, education, and supplemental retirement income. Borrowers make no monthly payments on a reverse mortgage during its term. The loan becomes repayable when the borrower sells the home or permanently moves out. In addition, the repayment amount can't exceed the value of the home.

To educate consumers about reverse mortgages, the National Reverse Mortgage Lenders Association (NRMLA) has created the Guide to Reverse Mortgages. This free booklet answers frequently asked questions, provides detailed information on the loan origination process, and includes a Code of Conduct for lenders, so that consumers can know their rights when working with a lender. The booklet may be obtained by calling NRMLA at 1-866-264-4466 (toll-free) or 202-939-1792.