According to the National Reverse Mortgage Lenders Association (NRMLA) there is a new Bill containing a provision to raise the HECM (Reverse Mortgage) limit through the end of 2009 to $625,500 which has been introduced in the House of Representatives. The current nationwide limit is $417,000 with the exception of a few high price/value areas. This would give millions more access to the program due to a current lack of jumbo reverse mortgage in the marketplace which is due to the current credit crisis. The lending limit is the limit of value that would be considered in the reverse mortgage equation and not the loan amount. That is why the limit increase is crucial and if passed, senior borrowers with mortgage balances greater than $300,000 will qualify. In most cases, it has been my experience, that seniors with jumbo mortgages and high balances have been negatively affected by a decrease in net worth and losses in investment portfolios, creating a need for more options like a reverse mortgage. Unlike the traditional reverse mortgage borrower whom might have a life changing event that distrupts normal income these high balance mortgage holders are faced with a retirement, nest egg or legacy crisis. There are many sophisticated financial planning strategies that can be put into place with a reverse mortgage and higher limits would make the outcome of those strategies more worthwhile for potential reverse mortgage candidates with higher value homes. For maore information on these strategies, sign up for my newsletter at www.loan62.com.
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