Reverse Mortgage Loan Limit Increased To $625,500.

2/18/2009

posted by N. Sioris

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President Obama's $787 Billion economic stimulus package included a new higher national FHA - HECM Reverse Mortgage loan limit of $625,500. The previous loan limit was $417,000. nationally except in HI, Alaska and Puerto Rico.

The new higher loan limit of $625,500. is particularly good news for several reasons:

1. Due to the current financial meltdown on Wall Street there are no longer any lenders in the market that are willing to loan "Jumbo" loan amounts on a reverse mortgage. That left anyone with a high value home - (for example $450,000. or higher,) access to such a small amount of their equity, that it was hardly worth their while to even bother with an FHA/HECM reverse mortgage.

2. The new higher loan limit of $625,500. will now offer anyone with a home value of approximately $417,000. or higher access to substantially more money than under the previous limit.


Two Caveats To The New Lending Limit:

1. Under the new law, the higher loan limit will only be available for loans originated for the balance of 2009. (It is possible that Congress could request an extension of this time frame, but as of now, it will expire at the end of the year.)

2. Lenders will not be able to process or close loans based upon the higher loan limit until HUD issues an official "Mortgagee Letter" allowing the implementation of the new guidelines as set forth in President Obama's Stimulus Package.

As a side note, one would hope that since there is a possibility that the higher lending limit will permanently expire at the end of this year, that HUD will act quickly to get this provision implemented. After all it is not called a "Stimulus" package for nothing.

If you are interested in receiving a reverse mortgage loan estimate based upon the new higher lending limit, click here or call our offices toll free at: 1-888-269-1098