If your considering a reverse mortgage, here's some important changes you need to know. And NOW! Effective October 2, 2017, there will be new limits on the total amount you can borrow through a reverse mortgage. As of today, the average reverse mortgage
borrower can draw 64% of home equity. However with the changes coming into effect October 2nd, that percent will drop to about 58%, according to the Wall Street Journal.
While equity draw rates are falling, the up front mortgage insurance premium will sky rocket. For most reverse mortgage borrowers, premiums for those taking less than 60% of the loan proceeds up front, will go from the current 0.5% to 2% of the “maximum
claim amount.” On the flip-side, if your expecting to draw at 60% of the loan proceeds, the up front mortgage insurance premium will fall slightly from 2.5% to 2.0%.
Here's what the Trump Administration has in store for you...
- Annual mortgage insurance premiums will drop. The annual premium will fall from today’s 1.25% of the outstanding balance to 0.5%. This change preserves more equity for borrowers over time by slowing the rate at which the loan balance grows.
- One idea the mortgage industry favors, is to find ways to make the process move quicker, less expensive and more efficient if a home with a reverse mortgage goes into foreclosure.
You have questions on how a reverse mortgage works? Click below for more information.
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