1-23-09 Possible Loan limit increase

There has been some talk of the HECM loan limit of $417000 being raised to $625000 as a part of the new stimulus package.

With the elimination of most if not all reverse mortgage jumbo loan programs, This could be a great benefit to senior looking to replace some or all of income normally taken from their hard hit retirement accounts.

Let your representatives in washington know that this rule change could help the American senior homeowner.

FHA Modernization Act

Good news for those of you that were waiting for the higher HECM loan limits.


FHA Commissioner Brian Montgomery announced that the new HECM nationwide loan limit (maximum claim amount) will be $417,000. The target effective date is November 1, 2008

More news to come when the official start date is set.

Eben

Reverse mortgage legislation

The FHA Modermazation Act (s.2330) is currently placed on hold.

It is now unlikely that any progress will be made till the spring of 2008.

Eben www.mireverse.com

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HECM 100 vs HECM 150

There has been some talk lately about the potential benefits of the hecm 150 over the hecm 100 .

The interest charged is 50 basis points higher than the hecm 100. this has the net effect of a lower service set aside and faster creditline growth rates. The benefit of which is more available cash to the borrower and faster credt line growth rates.

Anyone that is looking to hedge a homes future value (see video) or maximize tenure payments or current cash to close. Should look into this program.

If your bank recommends the 150 over the 100 be sure to ask if you are eligible for any lender credit at settlement.

That's all for today.

Eben

HECM Rates hit new low

HECM 100 rates are at 4.25%

12-4-2007

Long time no blog

Hello glad to be blogging again.

What is a Reverse Mortgage Service Set-Aside?

All Reverse Mortgages have a monthly service fee charged to the borrower. The fee varies in cost between $35.00 and $20.00 depending on the Reverse Mortgage being originated.

The Home Equity Conversion Mortgage (HECM) sets a certain amount of money aside at closing to pay for the anticipated future monthly service fee. This is known as the Service Set-Aside.

This is not a cost to the borrower until the fee is charged at a future date. The unused portion of the Service Set-Aside will be returned to the borrower when the loan is repaid.

The Service Set-Aside equals the Present Value of the anticipated future stream of monthly service fees to be earned by the lender.

Example: A borrower is age 62, and and will have a reverse mortgage for 38 years or 456 months,(reverse mortgage calculations always assume the borrower will live to be 100) The interest rate used for the present value calculation is 6.72% the same rate as charged on the reverse mortgage. The service fee is $35.00 dollars monthly.

Using a financial calculator enter 456 as number of payments , .0672 as the i% and 35 as the payment. Then hit the PV key to get your present value. This will equal the Service Set-Aside amount; in this case $5760.00.

Eben Johnson Reverse Mortgage Specialist.
www.mireverse.com

Your Age and Reverse Mortgage Proceeds

The proceeds of a Reverse Mortgage are positively correlated with the age of the borrower. Borrowers aged 62 (lowest allowed) are eligible to receive a smaller net principal limit than a borrower aged 95.

The younger a borrower is the longer the reverse mortgage lender will have to wait for the loan to be repaid. Since the loan interest is generally paid from the equity in the home at death of the borrower, the amount of equity at the beginning of the reverse mortgage must pay for the projected interest and principal borrowed.

Eben Johnson Reverse Mortgage Specialist
www.mireverse.com