House prices have spent 2021 rising in the stratosphere. Now the limits of some reverse mortgages are also increasing.
In 2022, the maximum home equity conversion mortgage claim amount will increase to $ 970,800 from $ 822,375, the Federal Housing Administration said.
A home equity conversion mortgage, or HECM, is a type of reverse mortgage that is insured and backed by the federal government. It can be used for any purpose.
This new maximum amount for HECMs will apply to case numbers assigned as of January 1. It will also apply to “special exception areas” – Alaska, Hawaii, Guam and the Virgin Islands.
The higher limits will open up new opportunities for seniors who hope to use a reverse mortgage to help fund their retirement.
According to the National Reverse Mortgage Lenders Association (NRMLA).
In a press release, the NRMLA praised the higher national loan limit for HECMs, noting the “very aggressive” rise in house prices in 2021 and saying the higher limit recognizes the current state of housing in the states. -United.
Since housing costs vary so much across the country, it might seem odd that a nationwide limit applies regardless of where a house is located. But the NRMLA – which has advocated for the single national limit – explains that older people typically use an HECM to dip into money from their home equity so they can continue to live in their home.
As the NRMLA puts it in the press release:
“The costs of aging, prescription drugs, durable medical equipment, adapting a house with stair rails, etc. do not differ by region. Thus, a homeowner with a higher valued property in an area with a low FHA loan limit should not be penalized by only being able to borrow based on the [traditional] mortgage limit.
Is The Reverse Mortgage Right For You? May be. But not everyone can benefit from this option. To learn more about the pros and cons of reverse mortgages, see “Do I Get a Reverse Mortgage?” “
Disclosure: The information you read here is always objective. However, we sometimes receive compensation for clicking on links in our stories.