For the fifth year in a row, the Federal Housing Administration (FHA) is increasing its loan limits; this time, to $970,000 for reverse mortgages in the new year.
The proposed increase will reflect on areas that typically have higher-than-average home values. In the public statement above, the average home value, in this case, would surpass 115% of its baseline.
So what does that mean for seniors?
The plus side of this increase is definitely something they’ll want to know more about.
How Much More Has the Loan Limit Increased?
According to the FHA, the new maximum claim amount for reverse mortgages will have increased by almost $150,000 compared to 2020-2021’s lending limit of $822,375.
Why Is This Happening for Reverse Mortgages?
In a report from the Federal Housing Finance Agency’s (FHFA) for 2021, “accelerated” home price appreciation is the biggest reason for increasing the loan limit.
In the same report mentioned earlier, home prices increased by 18.5% in the third quarters of 2020 and 2021.
That number is more than twice the growth rate seen last year.
In reality, it makes sense to increase the loan limit for reverse mortgages. It makes sense for the FHA to keep up with the quickly-growing home price appreciation that has happened this past year.
What Does This Mean For Your Clients?
The good news is that borrowers with higher home values will be able to access more equity from their homes. Put simply, the higher the loan limit, the more money is available to them.
Current borrowers could also qualify for more money through a refinance transaction on their reverse mortgages. It is even possible that the loan limit could inspire more refinancing activity in the new year.
If your clients are looking to get or refinance a reverse mortgage, now would be the time for them to do so.
Reverse mortgages already give seniors options to help take care of their financial needs. With this new loan limit, they can get more equity from your home.
Is It A Good Time to Look Into a Reverse Mortgage?
With this news, here are some excellent reasons to help your clients look into reverse mortgages right now:
- If they already have a high-valued home in equity
- If they plan on staying in your home and not moving any time soon
- If they also need more cash flow to keep up with everyday expenses
If your clients are looking for more financial freedom, it is only right to let us help you give them the options and benefits of getting a reverse mortgage this year, especially with this loan limit increase.
For more information, contact us today.