Higher loan amounts to be available for older borrowers

One of the major factors in determining the loan amount available to a Reverse Mortgage borrower is their age; the older the senior, the more money they can borrow. (The amount of equity available in the home is the other major factor.)

Changes to the Reverse Mortgage program in the fall of 2013 reduced the loan amounts available for most borrowers, but HUD recently released a new mortgagee letter advising of upcoming changes to begin this August. These rules will affect the PLF--Principal Limit Factor--the maximum lifetime amount that a Reverse Mortgage borrower can receive.

With the new rules, borrowers older than 64 using a 5% interest rate will have an increased PLF. At a 6% interest rate, borrowers age 78 and older will have an increased PLF.

As I mentioned in a previous column, there are also changes to how Reverse Mortgage loans will affect borrowers who have a spouse younger than the required age of 62. These non-borrowing spouses will soon have more protection and increased ability to remain in the home after the borrower passes away, bu this may affect the loan amount available.

If you're considering a Reverse Mortgage and want to know whether it's better to begin the process now or after the new rules go into effect, contact me. I can be reached at (510) 610-5223, or send me an e-mail at ed.ramos@fpfmail.com.

I look forward to working with you!