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New reverse mortgage rules for 2018 you need to know!


New reverse mortgage rules for 2018 you need to know!

Reverse mortgage rules have changed, and it’s actually going to affect your borrowing situations.

Senior citizens find the reverse mortgage to be a big relief in their lonesome and financially unstable days of retirement.

You own a big house but have no one to take care of the property. Your children live in some other states or abroad, and you are left here with your caring spouse, with both breathing in each other’s arms.

That’s exactly where a reverse mortgage comes to your aid when you want to cash out the property you have, while still keeping it as your primary residence, until your death.

*Know more about reverse mortgage!

As of 2018, the new reverse mortgage rules will help you to borrow more, and might even allow you a lower upfront Mortgage Insurance Premium cost.

What are the general rules for a reverse mortgage?

Not everyone can apply for a reverse mortgage. Just because you own your house outright, you won’t qualify for this loan.

FHA has designed reverse mortgage to satisfy the economic situation of senior citizens. So, the first major cut-off is you should be 62-year old or more.

Next, you should have no existing liens attached to your property.

Now, you can only apply for a reverse mortgage if you use the property as your primary home, and even if you are away most of the time, it should be due to valid medical reasons.

If you can meet all the criteria, then only you will be able to take out a reverse mortgage loan.

So what are the new reverse mortgage rules as of 2018?

The following rules became active from October, 2017.

A change in the Principal Limit Factors:

The news is, the maximum borrowing limit is now increased to $679,650 on one single loan. This I consider a big increase from the past limit.

Also, the Principal Limit Factor is adjusted, and you can see that on HUD’s official website. It is a bit complicated to display the changes as the table could be a misfit for this post.

But overall I can summarize one thing for you; that is, now you have more borrowing potential than before.

Obviously, you can borrow more amount if you plan to be a single borrower. That’s so because the PLFs are right now pretty low for the youngest of multiple borrowers.

The changes are already in effect from 2nd of October 2017, and the new limits are valid through 2018.

The cash for keys program:

This rule is now set forward by HUD and will be applied to all reverse mortgages.

This rule or program will be providing mortgagees with incentives to reimburse the monetary obligations faced by any borrower while issuing a deed instead of a foreclosure.

This incentive from HUD can also be used to speed up any foreclosure proceedings by a mortgagee.

The lender can offer a cash value to the borrower to speed up the eviction or foreclosure and come to an honest closing agreement.

Upfront Mortgage insurance premium decrease:

Previously the rule was, you had to pay an upfront mortgage insurance premium of 0.5% of the total claim amount. if you took out 60% of your claim right away. And 2.5% of the total claim amount if you took more than 60% of your loan amount upfront.

But now, the rate is a flat 2% on the overall 100% of the claim amount. So, whatever amount you take out as upfront, you can’t evade the 2% cap.

Hence be wise in deciding how much amount you want on the first go.

A decrease in the annual premium of mortgage insurance:

Borrowers have always complained of hefty annual premiums they had to pay for their reverse mortgages.

So HUD has finally listened to those calls and tried their best to adjust the rate. The annual premium is now set at 0.5% of the total claim amount, a decrease from the previous 1.25%.

Hope this news brings a smile on your face.

Those were the very basic concepts you should have an idea of, if you are planning to get a reverse mortgage and want to stay in peace in the last years of your life.

Consult an attorney and approach a reverse mortgage lender, and discuss your issues in brief.

Don’t be late, as these rules and numbers are ever changing. Hit the best while you have.

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