Saint Augustine, Florida (PressExposure) January 06, 2009 -- It's about time that the changes in the HECM or Home Equity Conversion Mortgage have finally come to pass. On November 6, 2008 the Federal Housing Administration passed along with Congress that the original limits on the amount available to seniors set by county limits has been removed. The new limits have been raised to $417,000 from the past average of $232,000. This one change has opened the door to thousands of seniors who in the past would have had to come to the closing table with money in hand. In this troubled and hard economy more seniors who have mortgages can now get out from under the payments and had more spendable monies to there pockets. In addition; many seniors who had taken out a Reverse Mortgage in the past and had to leave equity on the sidelines simply because of the county limits of the past fell short for them can now refinance. Not to mention because of the lower interest rates of today can receive more money.
Another change that is real important to mention, is the changes as to whom can be in the Reverse Mortgage Industry. The new law makes it very clear that people in industries such as Insurance, Financial Investments or Annuities cannot offer Reverse Mortgages. This is a great value to seniors they cannot be setup for failure again due to unscrupulous or unethical sales people.
This next change is a huge change in the cost of Reverse Mortgages, the reduction in the amount of the closing cost. The old way of calculating the origination fee was 2% of the total appraisal with no limit. The new calculation has limits that are 2% of the first $200,000 of value and 1% of each hundred there after to a maximum of $5,950.00 this one is a big saver for seniors.
Now for 2009; on January 1, 2009 the new addition to the Reverse Mortgage Industry is the availability for seniors over the age of 62 to use a Reverse Mortgage to purchase a home. The program is designed to assist seniors to purchase a home without having any mortgage payments for the rest of the life. This is the biggest change in my opinion, since many seniors are in homes that do not fit their lifestyle or are to expensive to maintain. In some case seniors are renting properties where their rent keeps increasing year after year and pricing them out of the game.
Now the beauty of the program is that the amount of money available for the purchase is based on the appraised value and not the purchase price. With all of the foreclosures and or short sales or estate sales it can be possible for a senior to purchase a home with no money out of pocket. But it has to be told that they may have to put some money down on the property if the home appraised value is the same as the purchase price. The criterion is very simple just like a Reverse Mortgage for a homeowner it is age of the youngest senior, the appraised value and the current interest rate. That is it in a nut shell!