Throughout the past years, an increasing number of homeowners have been looking towards reverse mortgages as a form of income. When the 2008 financial crisis hit, it had numerous effects on the housing industry and the economy in general. The financial crisis impact influenced many changes in how reverse mortgages are handled. In August and November of 2008, laws and regulations were passed to make reverse mortgages more accessible and more beneficial. This article will cover some of the reasons why it is a good time to take advantage of reverse mortgage benefits.
Limited origination fees
One of the main drawbacks of getting reverse mortgages has always been the upfront costs required by reverse mortgage lenders. In August 2008, the Federal Housing Association (FHA) made reforms that limited origination fees. All of the FHA-approved reverse mortgage lenders are only allowed a maximum origination fee of 2% for claims of $200,000 or less. If the claim should exceed $200,000, the homeowner is charged an extra 1% for the portion over $200,000. By placing a limit on origination fees, the FHA has also limited one of the downsides of reverse mortgages.
Increased lending limit
Originally, the maximum lending limit for federally-insured reverse mortgages was set to just under $362,800. A law was passed on the 6th of November 2008, increasing the lending limit of federally-insure reverse mortgages up to $417,000. In effect, senior homeowners could have access to larger reverse mortgage claims. Higher lending limits can mean a big difference for senior homeowners who are looking to use reverse mortgages as a form of income. Just remember that not all applicants will be given a reverse mortgage claim of $417,000. The amount that homeowners receive for reverse mortgages depends mainly on their home equity standing and their age.
Updated services and features
Ever since the reverse mortgage industry started picking up in 2007 and especially in 2008, reverse mortgage applicants have been getting more services and features to help in financial decision-making. The Department of Housing and Urban Development (HUD), for example, can help senior homeowners in finding FHA-approved lenders and counselors. Some Internet sites even have calculators that can help in determining reverse mortgage cost and claim amounts. When getting reverse mortgages, remember to use all of the resources available to make sure that you are making a sound financial move that’ll allow you to take advantage of reverse mortgage benefits.