One Reverse Mortgage is encouraging seniors to take advantage of the Federal Housing Administration’s reverse mortgage program before the amount seniors can receive decreases between 1 and 5 percent.
While FHA hasn’t officially announced the principal limit changes, the annual mortgage insurance premium (MIP) will increase from .5 percent to 1.25 percent. The MIP is the insurance costs on a loan that protects FHA should the home not sell for at least the balance of the reverse mortgage.
“Anyone considering a reverse mortgage will really benefit by beginning the process soon,” said Jay Farner, CEO of One Reverse Mortgage. “This is a fantastic opportunity for folks to get into a reverse mortgage without having to pay any additional fees, and under the current principle limits that will allow clients to leverage more of the equity from their home.”
During a call with reverse mortgage lenders earlier this month, Vicki Bott, HUD Deputy Assistant Secretary stressed the changes are enhancements were to make sure the program is sustainable. The changes are expected to become active on October 4, 2010.
One Reverse Mortgage has endorsed 1,930 HECM loans during 2010, making it the fourth largest reverse mortgage lender according to data from Reverse Market Insight.
Note: This was posted prior to the new PLF announcement, which provides more proceeds to many borrowers.