Now that Congress has passed HR 3288 current reverse mortgage limits may be at risk. Will HECM Reverse Mortgage loan limits be reduced?
With the recent fall in real estate prices, there may be something else that is about to fall. That may soon be HECM reverse mortgage loan limits. That limit was raised in November of 2008 to $625,000 to adjust to the rise in real estate values at the time. So now that real estate values have plummeted, will HECM Reverse Mortgage loan limits be reduced as well?
Will HECM Reverse Mortgage loan limits be reduced?
Speculation abounds as to whether those limits will decrease since Congress passed the HR 3288 budget bill for the coming year of 2010. In the presence of fears of inadequate coverage of the HECM program, due to shortfalls, it is very likely that this will be the case.
How does the new budget affect HECM loan limits?
The estimated amount of the shortfall for the coming year 2010 is $789 million. That is a huge chunk of the budget so something has to give. The possibility of cutting anything from the budget is very real and that could be as we said before the HECM FHA reverse mortgage program.
Why will the budget affect HECM loan limits?
The amount of reverse mortgage loans is determined by the current value of an existing home along with the age of the applicant and current interest rates. When home values decrease that alone will affect the limits on such loans. Therefore, it is very possible that this new budget will impact the over all decision as to HECM loan limits.
Will HECM Reverse Mortgage loan limits be reduced?
All this considered, if you wish to get a HECM FHA reverse mortgage you may want to do that now before the limits are reduced.
Related posts: