In all of the hoopla regarding the passage of H.R 3221 a week ago, nothing was mentioned in the media about the provision regarding Reverse loans. The FHA Home Equity Conversion Mortgage (HECM) will have it’s lending limit increased nationwide to $417,000.
In the greater metropolitan areas, that figure could be $625,500! In either case, these amounts will be the same throughout the United States and no longer based on the previous method of using the amount designated by a County.
As of this time, there is ongoing discussion as to whether the 417K will be the “floor” and the $625,500 the ceiling but until that is decided it could cause a delay in moving forward with these new figures.
There is also a provision that will allow the funds from the HECM to be used for a home purchase. This could be very signaficant for a senior wishing to relocate but unable to qualify and make mortgage payments on a traditional loan.
I don’t have any additional details on it as of this but the time. But the projection is for it to be available sometime in November.
The loan origination fee has been reduced by .50% but in actuality, the overall cost to the borrower doesn’t change, because of the higher lending limits. This is because the Mortgage Ins. Premium (MIP) that is charged by FHA, is based on the lending limit and since they are going to be higher, pretty much washes out the savings gained from the lower origination fee.