The New Year 2020 probably is going to be a great year for those looking to borrow a reverse mortgage. This is because the Federal Housing Administration (FHA) has planned to increase its reverse mortgage limit 2020.
The maximum claim amount for 2020 will increase to $765,000 from $726,525 in 2019. This is the fourth continuous year when the FHA has increased the reverse mortgage limit 2020.
For many years, the lending limit of the reverse mortgage remained unchanged. It rose in 2017 from $625,500 limit to $636,150, and this rise has accompanied the conforming loan limits of Fannie and Freddie mortgages.
By definition, a reverse mortgage is a type of loan designed especially for seniors age 65 or older looking to turn the home equity into retirement income. With a reverse mortgage, the homeowner does not need to make any monthly payments to the lender. The lender makes payments to the homeowner.
Further, you can choose the desired way to receive the payments from the lender. The interest gets rolled into the loan balance. Therefore, you don’t need to pay anything upfront when applying for reverse mortgage. Also, you can use the money from reverse mortgage for paying your daily expenses, hospital bills, to buy new home and for travel as well.
Nearly $40,000 increase in limit over last year’s HECM means you will able to extract more equity from your home with a government-insured reverse mortgage. Further, it also means that more consumers could qualify for the reverse mortgage loan.
The new reverse mortgage limit will take effect on or after January 1, 2020, through December 30, 2020, as announced by HUD.
Top 3 Reasons Why 2020 Is The Best Time To Get A Reverse Mortgage
Condo Owners Have More Options with Reverse Mortgage Limit 2020
Recently, the United States Department of Housing and Urban Development (HUD) announced that they now offer a single unit condo approval again. However, the process is not like the previous “spot approval,” which was an application to condos that have no 10% of more concentration in the project.
The new approval is a full-blown project approval that requires the same document except the time the process takes to complete after the lender collects and reviews all documents. The good news is the proprietary program now accepts loans on condos down to a value of $400,000. It doesn’t include all condos but a lot more than before.
More Features Added To Proprietary Program
In 2020, jumbo reverse mortgage will be available once again, and this time, with more choices and options. Previously, the program was available only as a fixed rate, full draw product.
These loans were available at a high rate, about the 7% range. Moreover, the jumbo reverse mortgage lends less as the percentage of the value of the home. The amount of money a borrower can receive on a loan also depends on rates.
All-Time Low Jumbo & Proprietary Rates
With fixed rates available as low as 4.99% on the jumbo reverse mortgage programs, borrowers can combine lower interest rates, higher values of property, and higher amounts as the value’s percentage. It results in excellent jumbo programs for many borrowers.
Even the borrowers, who avoided jumbo programs because they believe that they cannot afford it or due to the higher rates, should look into these in 2020.
Moreover, there borrowers can look into lines of credit on the jumbo programs. This suggests that borrowers don’t have to take a full draw of their loans to get the jumbo reverse mortgage.
2020 looks to be the best time to secure the highest reverse mortgage benefits for homeowners of age 62 or older. For retirees with home value within the new FHA lending limit, allows you to receive more money from a reverse mortgage limit 2020 than in the previous years.
All in all, 2020 will start off with nice enhancements as well as improvements in the HECM program. Converting equity into loan proceeds with more reverse mortgage limits 2020 give senior homeowners the financial freedom of using money in retirement.
If you want to know more about the reverse mortgage benefits, new lending limit and applying process, call Brett. The entire process of a reverse mortgage can be complicated, and professionals like Brett can help sort through your situation.