Trump administration reverse mortgage changes on Oct. 2

In an effort to shore up the Federal Housing Administration Insurance Fund that insures reverse mortgages, the U.S. Department of Housing and Urban Development (HUD) is making changes to protect the program for the future.

Some of the positives are, for people taking more than 60 percent of their proceeds upfront, FHA insurance premiums will decrease from 2.5 percent to 2 percent.

Ongoing FHA insurance will drop from 1.25 percent to 0.5 percent for all. Some of the negatives are loan to values will decrease providing less money to borrowers. For people taking less than 60 percent of their proceeds, upfront mortgage insurance premiums to FHA will increase from current 0.5 percent to 2 percent, increasing the costs for some from $3,180 to $12,783.

A reverse mortgage is a loan that enables homeowners 62 or older to borrow against the equity in their home without having to give up the title or take on a new monthly mortgage payment. The money received can be used for any purpose.

The loan amount depends on the borrower’s age, current interest rates and the value of the home. The homeowner must remain current on property taxes and insurance.

A reverse mortgage does not have to be repaid until the borrower sells or moves out of the home permanently, and the repayment amount cannot exceed the value of the home. After the loan is repaid, any remaining equity is distributed to the borrower or the borrower’s estate.

For more information, call David Chee, NMLS ID#263222 at (800) 9673575 at HighTechLending, Inc., Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act. NMLS #7147. 7777 Greenback Ln. #210 Citrus Heights, CA 95610.

NMLS Consumer Access: www.nmlsconsumeraccess.org.