With new reverse mortgage rules set to go into effect on September 30th, it was a perfect time to have Billy Wright Senior Loan Officer and Branch Manager of Americana Mortgage join us as a guest to explain what’s going on and to answer some of your questions.
As a reminder: a reverse mortgage is a home loan that allows homeowners 62 and older to convert a portion of the equity in their homes into cash, as long as the home remains their primary residence. Most reverse mortgages are offered through the Department of Housing and Urban Development and are guaranteed by the Federal Housing Administration (FHA) through a program called Home Equity Conversion Mortgages (HECM).
Up until the new rules, pretty much anyone who had equity in a home could qualify for a reverse mortgage, but starting January 13, 2014 there will be new underwriting standards for new applications to ensure that borrowers have the ability to continue paying taxes and insurance on an ongoing basis. Additionally, as of October 1, homeowners will only be able to draw 60 percent of the available principal limit, unless there are mandatory obligations such as mortgage payoffs or liens. (A credit card debt is NOT considered a mandatory obligation.)
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