On February 17, 2009, President Barack Obama signed a new bill, The American Recovery and Reinvestment Act of 2009 (ARRA). This is the “stimulus bill” we have heard so much about in the news lately. Under ARRA, the national Federal Housing Administration (FHA) loan limit for the Home Equity Conversion Mortgage (HECM) has increased from $417,000 to $625,500.
This increase will allow many senior homeowners living in higher valued homes the ability to receive significantly more money from a FHA Reverse Mortgage than in the past.
If you previously did not qualify for a Reverse Mortgage due to a high existing mortgage or if you simply did not think it provided enough money, this is the time to check with a Reverse Mortgage lender again.
Additionally, many seniors who have already been enjoying the benefits from their existing Reverse Mortgage may now be able to refinance because the increased loan limit may make even more money available.
Talk with a lender about refinancing.
This change is being offered as a temporary measure, through 2009 only, because it is part of ARRA. The $625,500 limit will revert back to $417,000 at the end of this year unless Congress passes another bill to extend or increase it.
Congress recognizes the many benefits of Reverse Mortgages and continues to improve the benefits and safeguards of the popular FHA insured program. Over the past few years, Congress increased the amount of money that seniors can receive from the program, reduced the fees, and expanded the program by allowing the proceeds to be used for home purchase. Co-ops have been approved by Congress but are awaiting HUD approval.
A Reverse Mortgage is a loan that enables homeowners aged 62 or older to borrow against the equity in their home without having to sell the home, give up title, or take on a monthly mortgage payment. The money can be used for any purpose. Homeowners should only consider a reverse mortgage if you plan to stay in your home at least a few years, as the upfront costs are considered high.
