Q: Someone told me the loan limits for reverse mortgages are going up. Is that true? Where is the best place to learn the details about this kind of loan?
A: A reverse mortgage is a unique loan that enables senior homeowners who are 62 or older to convert part of the equity in their homes into tax-free income without having to sell the home, give up the title or take on new monthly mortgage payments.
Borrowers can choose to receive reverse mortgage funds as a lump sum, monthly income, a line of credit or as a combination of both. Borrowers can use the funds for any purpose, including home repairs and improvements, medical expenses, in-home care, education and supplemental retirement income. No mortgage payments are due during the life of the loan. The loan becomes repayable when the borrower sells the home or permanently moves out. In addition, the repayment amount can never exceed the value of the home.
New loan limits are increasing in 2005. To learn more about how the new rates will affect Kansas, the Senior Press Service contacted a local loan provider. Here is what she shared.
"The U.S. Department of Housing and Urban Development has increased county lending limits for all FHA loans, including Reverse Mortgages. The lending limits affect the loan amounts borrowers can receive with FHA loans and are calculated on a county by county basis. Effective immediately the lending limit in Johnson County was increased to $201,638 from $194,750. More rural counties increased to $160,176 from $154,896. Actual property appraisal values determine the exact amount of any specific loan but the increased lending limits allow a higher loan amount for more expensive properties.
For information about your county, contact Ann Johnson with Wells Fargo Home Mortgage at 816-501-1662 or look in the phone book for a lender in your community. The National Reverse Mortgage Lenders Assn., a national nonprofit trade association, also has a booklet that helps explain the program in question-and-answer format. The booklet may be obtained by calling NRMLA at 1-866-264-4466 (toll-free) or ordering a copy through www.reversemortgage.org.