FHA makes reverse mortgage proceeds available for borrowers

The Department of Housing and Urban Development is making more proceeds available for some reverse mortgage borrowers, under new principal limit factors released June 27.

Last year the agency slashed proceeds, resulting in a roughly 15 percent cut across the board for all borrowers. The newest change raises the amount of proceeds for the older borrowers. Additionally, a reverse mortgage for married couples where one borrower is below age 62 will be allowed. These changes started August 4.

A reverse mortgage is a loan enabling homeowners 62 or older to borrow against the equity in their home, without giving up the title, or taking on a 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 borrower must maintain the property as primary residence and remain current on property taxes and homeowner’s 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, please call David Chee, NMLS ID#263222, (800) 967-3575. Reverse Mortgage Solutions, Inc. dba Security 1 Lending. NMLS ID 107636. Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act License #4131074.