Reverse Mortgages and New Regulations

For the longest time, there was only one choice for a Reverse loan when I became involved in the industry 12 years ago.   Since then, there have been numerous new programs with various options in regards to interest rates and fees and recently there have been some new regulations to further protect the borrower or a younger spouse who does not meet the minimum age of 62 to qualify for the FHA loan program.

I am going to share a summary of an article that was published by Bankrate about the new rules and why Reverse loans can safely be considered an option for retirement planning.

Bankrate:  New Rules Make Reverse Mortgage Viable

October 23rd, 2014 | by Cassandra Dowell Published in News, Reverse Mortgage

“Recent regulation changes to federal reverse mortgages have transformed the product from a “loan of last resort” to a viable financial planning tool, says Bankrate in a recent article.

Bankrate notes some of the key changes that paved the way for the expanded use of reverse mortgages: allowing non-borrowing spouses of reverse mortgage borrowers who pass away or enter assisted living to remain in their home, and allowing qualified borrowers to obtain an HECM even if their non-borrowing spouse is younger than age 62, with the caveat that the loan’s principal amount will be actuarially based on the age of the younger spouse.

Another major change noted is when the Federal Housing Administration, or FHA, announced its HECM for Purchase Program, which enabled qualified seniors to downsize or relocate by using a reverse mortgage to purchase their new home, thereby saving on closing costs.”

The remainder of the article will be in my next post, plus a link to the entire article.

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