Warning: Call-time pass-by-reference has been deprecated; If you would like to pass it by reference, modify the declaration of [runtime function name](). If you would like to enable call-time pass-by-reference, you can set allow_call_time_pass_reference to true in your INI file in /home/content/r/m/g/rmguru8000000/html/reverse_mortgage_answers/wp-content/plugins/formbuilder/formbuilder.php on line 384
County Limits | Reverse Mortgage Answers

Archive for the ‘ County Limits ’ Category

Seniors Benefit From New Higher Loan Limits

  • Written by rmpro
  • Posted November 17, 2008 at 5:18 pm

I like this article because it gives an honest overview of reverse mortgages. There are also some references at the end where the reader can find more information about these loans. The author mentions that these loans are comparatively expensive up front. That is true, but you also need to keep in mind that a reverse mortgage allows the homeowner to stay in the home until they die or move out permanently. If this type of loan enables a retired senior to stay in their home and live comfortably the rest of their life, with no payments, then it is worth every penny.

Monday, Nov. 17, 2008

Higher limits for reverse mortgages may benefit some seniors

By VICKI LEE PARKER - McClatchy-Tribune News Service

This month, many older homeowners got some long awaited good news when the Department of Housing and Urban Development approved the higher lending limits for reverse mortgages. Now a home equity conversion mortgage, or HECM, can be federally insured up to $417,000.

Brien J. Brandenburg, a reverse mortgage specialist for Wells Fargo Home Mortgage, said that some of his clients have been waiting at least three years for the higher limits in order to access more cash from their home equity.

“This is wonderful,” Brandenburg said. “The previous lending limits did not allow some seniors pay to off their first loan. The increased amount will help take that burden off their back.”

He gave the example of a 72-year-old person with a home valued at $400,000, for which he still owes $200,000.

Under the old limits, the most cash he could receive is $125,000, Brandenburg said. That’s not nearly enough to pay off his loan. However, under the new limits he could gain access to $255,000. That would be enough to pay off his loan and have $55,000 to spend on other expenses, he said.

Similarly, Brandenburg said, existing borrowers whose home value is greater than the new HUD limit may be able to increase their benefit by refinancing their reverse mortgage.

Over the past few years, the popularity of reverse mortgages has increased despite ongoing debate about their benefits.

In 2001, HUD reported that 7,793 HECM loans were funded. So far in 2008, there have been 112,154.

The ideal candidate for a reverse mortgage are seniors who have had their homes for a long time and have built up a lot of equity - the home’s value minus debt - in their homes. The idea is rather than sitting on all that equity, the homeowner could use the home as a source of cash.

Those who qualify can choose to get a lump-sum payment, monthly payments, a line of credit, or any combination of the three.

Christena Schafale, a counselor with Resources for Seniors, a not-for-profit agency in Raleigh, N.C., that provides services for older people, said she is excited about the new limits and believes it will help a substantial number of people.

However, she cautions that reverse mortgages are not for everybody. There are several circumstances in which getting a reverse mortgage would not be wise, she said.

- If you are planning to move soon it would not be worth it to get a HECM. “Theses loans are extremely expensive,” Schafale said. “It would be a waste of money to set up the loan if you don’t plan to remain in the house very long.”

- Don’t dip into your equity line too early. “People are tapping into their equity line just to have some fun and are finding themselves in their 80s with no more equity left in their home.”

- Don’t let a smooth-talking investor convince you to get a HECM loan in order to invest the money. “It rarely works,” Schafale said. She explained that typically the cost of the loan is about 8 percent of the loan amount. In order to for any investment to be profitable, you would have to invest your money in a fund that pays more than 8 percent. And that is rare in this strained economy.

To learn more about reverse mortgages:

- AARP’s Web site has a publication on reverse mortgages at www.aarp.org/revmort, or call (800) 209-8085

- Visit the National Reverse Mortgage Lenders Association’s Web site at www.reversemortgage.org.

To find lenders who offer FHA-backed reverse mortgages, go to:

- HUD’s Web site at www.hud.gov/ll/code/llplcrit.html. Enter your city or state and put a check next to “reverse mortgage (HECM),” then click “search.”

- NRMLA’s Web site at www.reversemortgage.org. Click on the “Locate a lender” box.

To calculate your HECM loan amount, try the following Web sites:

- www.aarp.org/money/revmort. Click on the loan calculator link in the middle of the page.

- www.revmort.com/nrmla/index.asp. Enter your date of birth, the value of your home and your zip code.

(Vicki Lee Parker is a freelance personal finance columnist. She can be reached at vickileeparker@gmail.com or (919) 877-5719.)

Possibly Related Posts:


No Comments
Filed under: County Limits, Economy, FHA, HECM, Income, Retirement, Reverse Mortgage Info

Reverse Mortgages Are a Bright Spot in a Weak Economy

  • Written by rmpro
  • Posted at 4:43 pm

Reverse mortgages allow equity to work for you

Reverse mortgages are bright spot in bleak financial arena

By DUANE MARSTELLER - dmarsteller@bradenton.com

MANATEE — With the credit crunch, tighter lending standards and the weak economy clobbering the conventional mortgage market, more lenders and brokers are going in reverse — as in reverse mortgages.

Long considered a niche product, reverse mortgages have been gaining popularity despite widespread public unfamiliarity with them and scattered media reports of scam artists using them to target seniors.

“Reverse mortgages are really one of the only positive stories in financial services this year,” said Peter Bell, president of the National Reverse Mortgage Lenders Association, an industry group based in Washington, D.C.

Federal figures show that a record 112,154 federally-insured home equity conversion loans — as the most-popular reverse-mortgage product is called — were originated in the fiscal year that ended Sept. 30. While that’s up slightly from 107,558 in the previous fiscal year, it’s nearly triple the 43,131 that were originated in fiscal 2005.

Only 157 reverse mortgages were issued in fiscal 1990, when the federal government began insuring them. Government-insured reverse mortgages now account for 90 percent of the market.

Those numbers pale in comparison to the estimated 13.7 million single-family mortgages issued on an annual basis.

“We’re still a very small niche,” said Darryl Hicks, the association’s spokesman. “Compared to the traditional mortgage world, it’s a drop in the bucket.”

But reverse mortgages, which allow homeowners 62 and older to borrow against their accumulated equity without having to sell their homes or make payments, are poised for rapid growth at a time when the overall industry is in a slump.

For starters, the reverse-mortgage market remains virtually untapped, Hicks said.

Roughly 450,000 reverse mortgages have been issued since their inception, or less than 2 percent of the 35 million current U.S. homeowners who are 62 or older, he said.

The low market penetration rate largely stems from unfamiliarity with reverse mortgages and a general reluctancy among current seniors — many of whom survived the Great Depression — to take out a mortgage in their later years, Hicks said.

But coming up behind them are more than 78 million baby boomers, who have shown a greater willingness to borrow but less of an inclination to save for retirement.

With rising living costs and falling stock prices hammering their meager nest eggs, more boomers likely will turn to reverse mortgages to help finance their retirement, said Debbie Layer, BankUnited’s West Coast Florida market president.

“I think it will gain a lot of popularity, especially with the economic challenges our seniors are facing,” said Layer, whose bank only recently entered the reverse-mortgage market.

Recent changes in federal law also are expected to spur reverse-mortgage growth, those in the industry said.

An economic stimulus package passed in July raised the maximum amount of a federally-insured reverse mortgage to $419,000, up from the old limit of $200,160 in rural areas and $362,790 in more-expensive metro areas. Before the increase, the Manatee-Sarasota area “had some of the lowest caps in the nation,” Layer said.

The law also capped closing costs on reverse mortgages at $6,000, and required tougher regulations on how they’re marketed with other financial products like life annuities and long-term care insurance. The latter should help reduce the potential for fraud, Hicks said.

Reverse-mortgage growth is expected to be concentrated in Florida and California, now the two biggest markets because of their larger senior populations. Federal data shows the Tampa Bay area was the nation’s third-largest metro market, behind Miami and Los Angeles, during the first half of 2008.

Lenders and brokers have taken notice of the growth potential, with more entering the field. Last year, Bank of America bought the nation’s third-largest reverse-mortgage originator and Ginnie Mae offered its first reverse-mortgage product.

There were some 2,600 federally approved reverse-mortgage lenders in September, nearly double the 1,400 a year earlier, according to the U.S. Department of Housing and Urban Development.

Hicks said the trade group has more than 600 members who account for about 95 percent of the market.

“We do anticipate with these legislative changes taking place and more consumer education, the market will continue to grow,” he said.

[Note: The new ceiling for reverse mortgages is $417,000, not $419,000.]

Possibly Related Posts:


No Comments
Filed under: County Limits, Economy, HECM, Income, Retirement, Reverse Mortgage Info

Another Great Article Explaining Reverse Mortgages

  • Written by rmpro
  • Posted November 5, 2008 at 2:30 pm

It’s amazing to me how many people are out there spreading confusion and half-truths about reverse mortgages. Many of these are people who should know better. Many are people who apparently are more interested in looking and sounding important and authoritative than in telling the truth. Seniors need to know the real truth so they can make informed decisions. This article is another I’ve found that contains the straight truth about reverse mortgages.

A lift for reverse mortgage market

By Tom Kelly

One of the most significant developments in the history of reverse mortgages occurred recently when FHA Commissioner Brian Montgomery announced that a new single national limit had been set, eliminating geographical boundaries for many seniors in the country’s most popular reverse mortgage program.

Loans insured by the Department of Housing and Urban Development, known as Home Equity Conversion Mortgages, or HECMs, now have a common ceiling of $417,000, regardless of where the home is located.

Previously, the HECM program assigned different lending limits by county ranging from $200,160 in rural areas to $362,790 in the highest home value areas. The new, higher lending limit will enable borrowers to obtain a substantially greater benefit from their homes, if the value is higher than the previous HUD limit.

Similarly, an existing borrower whose home value is greater than the new HUD limit may be able to increase that benefit by refinancing the reverse mortgage. The borrower is encouraged to contact the lender to weigh fees and costs to determine if it makes sense to refinance.

Lenders and consumers have been pushing for the single national limit for more than a decade, arguing that the long-time method of assigning limits by area for HECMs was too restrictive. All interested parties had been waiting for clarity on a figure: if the national limit would be set at $417,000, or $625,500, or a sliding scale somewhere in between. While many borrowers had hoped for a higher benchmark, the $417,000 number came as no surprise given the state of the conventional lending environment.

“HUD should be applauded for its expedient implementation of the single national loan limit for the HECM program, especially during such a tumultuous period,” said Peter Bell, president of the National Reverse Mortgage Lenders Association, a nonprofit trade group based in Washington, D.C. “The higher single national loan limit and other provisions expected to be implemented in the coming months make reverse mortgages a more viable retirement financial option for a broader audience who can receive higher benefits at lower origination fees than ever before.”

The Housing and Economic Recovery Act of 2008 recently reduced the maximum fee to 2 percent on the initial $200,000 of the home’s value and 1 percent on the balance thereafter, with a cap of $6,000. Previously, HECM fees were capped at 2 percent of your home’s value or the county lending limit, whichever was lower.

Bell said the new formula for maximum origination fees will become effective concurrently with the implementation of the new HECM loan limits. HUD is aiming for an effective date of Nov. 1.

Since HECMs were first launched as a pilot program in 1989, loan maximums have been slow to rise. In 2004, for example, the highest of the loan limits — applicable generally to major metropolitan areas — increased to $290,319, up from $280,749. The lowest loan ceiling, which typically applies to rural and non-metropolitan areas, rose to $160,176, up from $154,896. Clearly, a senior with an expensive home in a rural area did not find the HECM appealing.

More than 450,000 HECMs have been made since 1989. FHA, a branch of HUD, insured 107,367 HECMs in 2007 compared to 43,131 in 2005.

A reverse mortgage 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, line of credit, or as a combination of monthly income and line of credit.

They 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.

Reverse mortgages are originated largely by private lenders. Most are members of the National Reverse Mortgage Lenders Association (www.reversemortgage.org) and are required to sign a code of conduct and follow best practices for the treatment and counseling of seniors.

Possibly Related Posts:


No Comments
Filed under: County Limits, Economy, FHA, HECM, Income, Rates, Retirement, Reverse Mortgage Info, hud

New Limits: You Can Get a Lot More With a Reverse Mortgage

  • Written by rmpro
  • Posted October 22, 2008 at 6:16 pm

HUD Approves Single National Loan Limit of $417,000 for Reverse Mortgage Program

NRMLA NEWS RELEASE
October 3, 2008

WASHINGTON, DC – The National Reverse Mortgage Lenders Association announced that the Department of Housing and Urban Development (HUD) approved a single national loan limit of $417,000 for federally insured Home Equity Conversion Mortgages (HECM). The new, higher lending limit will enable borrowers to obtain a substantially greater benefit from their homes, if the value is higher than the previous HUD limit. Previously, the HECM program assigned different lending limits by county ranging from $200,160 in rural areas to $362,790 in the highest home value areas.

Similarly, existing borrowers whose home value is greater than the new HUD limit may be able to increase their benefit by refinancing their reverse mortgage and are encouraged to contact their lenders.
To identify a reputable lender, Consumer Reports, in its October 2008 Money issue, recommends that seniors contact NRMLA members, who are required to sign a code of conduct and follow best practices for the treatment and counseling of seniors. NRMLA’s consumer site at www.reversemortgage.org provides users with a searchable database of NRMLA lenders in their local area. “HUD should be applauded for its expedient implementation of the single national loan limit for the HECM program, especially during such a tumultuous period,” said Peter Bell, president of NRMLA. “The higher single national loan limit and other provisions expected to be implemented in the coming months make reverse mortgages a more viable retirement financial option for a broader audience who can receive higher benefits at lower origination fees than ever before.”

HUD is aiming for an effective date of November 1st, however the exact date will not be finalized until HUD issues a mortgagee letter on the new loan limit.
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.

You can read the rest of this article here.

Possibly Related Posts:


No Comments
Filed under: County Limits, Economy, Income, Retirement, Reverse Mortgage Info

Reverse Mortgages — A Great Help For Seniors

  • Written by rmpro
  • Posted October 9, 2008 at 2:26 pm

The New Rules on Reverse Mortgages

Seniors can borrow more at a lower cost

Posted September 3, 2008

Tapping home equity to finance your golden years is a strategy that’s growing in popularity. The housing law signed by President Bush this summer raises the amount seniors can borrow using federally backed reverse mortgages and lowers the cost of getting the cash. Here’s what you need to know about the new rules for reverse mortgages:

• Instant cash has strings. A reverse mortgage is a loan against your home’s value that doesn’t have to be paid back as long as you live in that house. Generally, you have to be 62 or older to be eligible for one. After paying a variety of fees, you can get a lump sum, monthly payments, a credit line, or a combination of these options. When the home is sold, the loan must be repaid with the proceeds. Any remaining equity goes to the borrower or heir.

• Know the limits. Most reverse mortgages are home equity conversion mortgages backed by the Federal Housing Administration, so you’ll still get your money even if the lender goes under. The new housing law creates a national loan limit of $417,000, but it can rise to as much as $625,500 in high-cost areas. The previous range was $200,160 to $362,790.

• Avoid fees. In a 2007 AARP survey, 69 percent of reverse mortgage borrowers found the costs to be high. The new law limits origination fees to 2 percent on the initial $200,000 of the home’s value and 1 percent on the remaining balance, with an overall cap of $6,000.

• Get counseling. To qualify for an FHA-backed reverse mortgage, you must discuss the loan with a federally approved counselor employed by a nonprofit or public agency. The session should be low-cost or free. “You should…be very forthcoming so that the counselor can help you [make] sure that a reverse mortgage is really the answer for you,” says Peter Bell, president of the National Reverse Mortgage Lenders Association. You can find a local housing counseling agency by calling (800) 569-4287.

• Be wary of sales pitches. Some lenders have tried to sell clients financial products that may be unwise investments. The new law prohibits requiring the purchase of annuities and other financial products in connection with a reverse mortgage.

• Keep up the house. Even after taking out a reverse mortgage, you’re still responsible for property taxes, insurance, utilities, fuel, maintenance, and other expenses. “If there is hurricane or flood damage to the home that you can’t repair, the loan is due,” cautions Prescott Cole, an attorney and elder-care advocate. “If you can’t repay the loan, you will lose your house.”

• Don‘t move. If you sell your home or no longer use it as your primary residence for 12 months in a row, you or your estate will have to repay the cash you received from the reverse mortgage, including interest and fees. Says Barbara Stucki of the National Council on Aging: “If you can’t stay [in the] home for quite a few years, then it’s a bad deal.”


Possibly Related Posts:


No Comments
Filed under: County Limits, Economy, Income, Q&A, Retirement, Reverse Mortgage Info, Safeguards

Will You Have Enough Money for Your Retirement?

  • Written by rmpro
  • Posted October 3, 2008 at 3:31 pm

The following article from the New York Times gets right to the heart of the matter - having enough of a nest egg to make your retirement years comfortable and secure. For those who don’t, a reverse mortgage is one of your best possible options.

Retirees Filling the Front Line in Market Fears

By JOHN LELAND and LOUIS UCHITELLE
Published: September 22, 2008
Older Americans with investments are among the hardest hit by the turmoil in the financial markets and have the least opportunity to recover.

John Ricksen for The New York Times

Robert Waskover, 79, of Palm Beach Gardens, Fla., said that gasoline costs and less income from his business have hurt him.


Dilip Vishwanat for The New York Times

Mary O’Connell, 76, of St. Peters, Mo., has no pension and counts on income from four stocks.

As companies have switched from fixed pensions to 401(k) accounts, retirees risk losing big chunks of their wealth and income in a single day’s trading, as many have in the last month.

“There’s a terrified older population out there,” said Alicia H. Munnell, director of the Center for Retirement Research at Boston College. “If you’re 45 and the market goes down, it bothers you, but it comes back. But if you’re retired or about to retire, you might have to sell your assets before they have a chance to recover. And people don’t have the luxury of being in bonds because they don’t yield enough for how long we live.”

Today’s retirees have less money in savings, longer life expectancies and greater exposure to market risk than any retirees since World War II. Even before the last week of turmoil, 39 percent of retirees said they expected to outlive their savings, up from 29 percent in 2007, according to a survey by the Employee Benefit Research Institute, an industry-sponsored group in Washington.

“This really highlights the new world of retirement,” said Richard Johnson, a principal research associate at the Urban Institute in Washington. “It’s a much riskier world for retirees, because people don’t have defined-benefit plans. They have pots of money and they have to worry about making it last.”

Possibly Related Posts:


No Comments
Filed under: County Limits, Economy, Foreclosure, HECM to HECM, Income, Refi a Reverse Mortgage, Retirement, Reverse Mortgage Info, reverse mortgage application

Can I refi my Reverse Mortgage and get more money?

  • Written by rmguru2
  • Posted September 20, 2008 at 3:47 pm

YES!
For those with a HECM
In many cases you can get more money to use for whatever you need by refinancing your Reverse Mortgage. If you currently have a HECM (Home Equity Conversion Mortgage) refinancing it is called a “HECM to HECM”. Naturally, there will be new closing costs and a lot of technical things you will need to know to help you decide whether it is worth it to do it. We suggest you GO TO THIS WEBSITE and fill out the small amount of information requested and let a Professional gain an understanding about your situation and offer sound advice. These Professionals are a great information source for specific situations and they offer their advice without strings attached.

For those with a JUMBO Reverse Mortgage
The new higher county limits that are coming in the next few months on HECM loans will have a HUGE affect on you. You may be able to switch to a HECM loan and end up with more money in your pocket and lower your interest rate at the same time. Like the one above this can be a tricky decision with lots of pieces to the puzzle. We suggest the same in this case. GO TO THIS WEBSITE and fill out the form. A Professional will contact you and give you valuable advice at no cost or obligation to you.

Possibly Related Posts:


No Comments
Filed under: County Limits, HECM to HECM, Refi a Reverse Mortgage, Reverse Mortgage Info

Understanding FHA County Loan Limits

  • Written by rmguru2
  • Posted at 3:25 pm

For years FHA, the Federal Housing Administration (essentially the mortgage insurance arm of HUD), has set lending limits for each county in the United States. These limits only effect Reverse Mortgages sometimes. If the Reverse Mortgage is a proprietary loan designed by a private firm they don’t apply at all. If a government-designed HECM (Home Equity Conversion Mortgage) loan is being done then the amount received by the Senior, called the “Benefit”, is a percentage of either the appraised value of the house or the County Limit, whichever is less. The amount a Senior can get is a percentage of value based on a formula derived from their age, 62 being the minimum. Many trying to understand how this works try to come up with simple ways to understand the formula, but the only way to do it right is to enter the required data into a reverse mortgage calculator. To look up your current county limit click HERE.

The new House Bill 3221, signed by President Bush on July 30, 2008, established a nationwide county limit so all counties will be the same. Industry Professionals think the new limit will be $417,000 with a provision for higher cost areas to be as high as $625.500. The old limit has ranged from $200,160 to $362,790. This is a major change, but will only affect those with home values higher than these old limits. The new higher limit will have the greatest effect on homes with values up to $500k that are in rural counties. If you are in this category this County Limit change is very important to you. We suggest you GO TO THIS SITE and fill in your basic info so a professional can consult with you about your situation. The professional can help you stay of top of the changes that will affect you specifically and how best to take advantage of these changes.

Possibly Related Posts:


No Comments
Filed under: County Limits

Effects of NEW FHA County Loan Limits to Reverse

  • Written by rmguru2
  • Posted at 10:44 am

California Senator Issues Letter About New Reverse Mortgage Loan Limits
(Please see a post elsewhere on this site to gain an understanding about FHA County Loan Limits

According to California Senator Barbara Boxer, the HECM loan limit has been increased to $625,000. Below is the 1st paragraph from the letter.

Thank you for contacting my office to express your views on Home Equity Conversion Mortgages (HECMs), reverse mortgages backed by the Federal Housing Authority (FHA). As you may know, previous legislation increased the size of the loans the FHA could offer but failed to raise the limit for HECMs. I am pleased to report that the Housing and Economic Recovery Act of 2008 – which passed Congress and was signed into law on July 30, 2008 – permanently raises the HECM loan limit to $625,000.

Entire letter from Senator Boxer

Senator Feinstein, also from California, sent out a letter that stating that $417,000 is the new HECM loan limit… great to see California’s Senators are on the same page. Bottom line, HUD has not yet made a decision.

House Bill 3221, signed by President Bush on the 30th of July, mentions both amounts. Professionals in the industry assume that $417k will be the nationwide county limit, but there will be an allowance for higher priced areas to be as high as $625,500. Everyone is still waiting for HUD’s attorneys to interpret the law and announce the effective date of the new loan limit. In the meantime we all wait.

Possibly Related Posts:


No Comments
Filed under: County Limits