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September 1, 2017
These big changes are designed to strengthen the long term health of the HECM reverse mortgage program.
Getting a reverse mortgage is not something you should do in a panic. This is a big serious financial decision. However, if you have ever considered getting a reverse mortgage, you should seriously think through the pros and cons of getting the loan now rather than later.
In fact, if have ever considered a reverse mortgage, here are 5 things you should do now:
If you have even the slightest interest in maybe getting a reverse mortgage before the Oct. 2 deadline, you should act now and schedule a reverse mortgage counseling appointment.
Some lenders are concerned that these counseling appointments will fill up quickly. When you make an appointment be sure to tell them that you may want to qualify for the loan before the Oct. 2 deadline.
Reverse mortgage counseling is a mandatory part of the reverse mortgage application. And the counseling must be done BEFORE you can officially apply for the loan and be assigned a case number. In California, the counseling must be done 7 days before you get a case number.
Loan amounts will go down after Oct. 2. It is estimated that reverse mortgage borrowers will get about 10-20% less if they wait to do the loan later this year.
How much you can borrow is determined by the lending limits that are set by HUD, the value of your home, your age and current interest rates.
You can get an estimate of your current loan amount with this reverse mortgage calculator. You can then talk with your reverse mortgage counselor about how your loan amount might change in the future. They should be able to help you estimate what happens:
Many people don’t realize that the HECM reverse mortgage has a flexible line of credit option. Instead of taking cash when you get a reverse mortgage, you can set up a line of credit.
With a reverse mortgage line of credit, you can lock in a higher loan amount now, but limit the costs of this loan.
While you may want to talk with multiple reverse mortgage lenders in order to find the best terms and interest rates, it is important that whomever you choose to work with knows that you are interested in acting quickly.
To obtain the higher loan amounts, you must have a completed application, a fully signed counseling certificate and be assigned a case number by your lender — all before Oct. 2.
HUD has chosen to act very quickly on these rather significant changes to the HECM reverse mortgage program.
You will need to be proactive and make sure that your lender is doing what they need to do get you a case number by the deadline.
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