HECM Reverse Mortgage - Could Be Your Bailout

7/31/2009

posted by N. Sioris

Stumble It!

HECM reverse mortgages offer a higher lending limit than ever before. At the end of last year FHA changed their antiquated way of determining loan limits by simplifying it into one National loan limit of $417,000.



However, shortly after that, the economy careened off a cliff sending everyone scrambling to hold on to whatever might be left of their stock market portfolios and retirement assets. As the financial meltdown's tentacles choked off bank liquidity and literally froze credit, President Obama had to implement drastic measures to try to stimulate the economy.

By early February of this year, the Economic Stimulus package was passed. Included in the stimulus was a provision that temporarily increased the national loan limit for HECM reverse mortgages all the way up to a whopping $625,500. Wow, that's huge!!

The increase to $625,500. helps in several ways. First, it allows folks with home values higher than $417,000. to access a much greater amount of their equity through HECM reverse mortgages, than they would have been able to at the lower limit of $417,000.

Secondly, because of the banking crisis, the lenders that previously offered jumbo reverse mortgages to people with high value homes, stopped offering those loans. Consequently, HECM reverse mortgages are almost the only viable option available in today's market, regardless of home value.


BUT ONLY UNTIL THE END OF 2009

The loan limit increase for HECM reverse mortgages is due to expire at the end of 2009. At that time the loan limit will revert back to $417,000. unless Congress decides to extend the provision.
If you have a high value home, and think that you may need to access your home equity through a government reverse mortgage, you may not want to procrastinate. Take advantage of the stimulus package now and create your own personal bailout plan.