Just as the new year has brought about big news in terms of loan limits for traditional FHA and conventional loan buyers, there is also an update on the reverse mortgage front.
If you are a homeowner aged 62 or older and you are considering a reverse mortgage (also known as a home equity conversion mortgage or HECM), then you might find this information interesting. Likewise, real estate professionals with clients in the market for a reverse mortgage should also be aware of the new developments.
The New Reverse Mortgage Limit
The Federal Housing Finance Agency (FHFA) expanded its loan limits for conforming loans; the FHA raised its limits concurrent to that, and now reverse mortgages are getting a new loan limit in 2017 as well. As of January 1, 2017, the new maximum loan amount that can be mortgaged, consistent with the value of the home, will be $636,150 (the previous amount was $625,500).
As the Department of Housing and Urban Development (HUD) noted in its press release, the new reverse mortgage limit is 150% of the national conforming loan limit of $424,100. This increase could be advantageous to reverse mortgage borrowers who have accumulated substantial equity in their homes. In our primary service area of Southern California, it may be especially beneficial to reverse mortgage borrowers in the high-cost areas of Los Angeles and Orange counties.
How it Differs from Other Loan Limits
Although the new reverse mortgage loan limit is being introduced alongside higher limits for traditional “forward mortgage” loans, there is one key difference: Unlike other loans, the reverse mortgage limit applies to loans nationwide.
Traditional FHA and conventional loan limits vary by county; for example, the new loan limit for FHA loans in the lower-priced Inland Empire market is $379,500, while in the higher-priced areas of Los Angeles and Orange counties, it’s $636,150. But for reverse mortgages, the limit is $636,150 no matter the location. Not all applicants will quality for that limit, but the new maximum may be advantageous for those who have the necessary equity in their homes in order to be eligible.
What to do Next
If you are a homeowner at least 62 years of age and you have acquired equity in your home, you can contact a lender to inquire about your eligibility for a reverse mortgage. Contact Wholesale Capital Corporation at (855) 640-2020 and ask to speak with a loan officer. If you are a real estate professional who wishes to partner with a lender that feels strongly about the reverse mortgage opportunity for seniors, a WCC loan officer will also be happy to speak with you.
Wholesale Capital Corporation is not affiliated with or acting on behalf of or at the direction of the Federal Housing Authority (FHA), the Department of Veterans Affairs (VA), or any government agency or government-sponsored entity. WCC is licensed by the California Bureau of Real Estate, Broker License #01147747 and the California Department of Business Oversight Finance Lenders License #603K610. Also licensed in Arizona by the Arizona Department of Financial Institutions, MB #0926199. Equal housing lender. NMLS# 9873