Effective today, October 1, the amount of money available for seniors applying for a HUD/FHA insured reverse mortgage dropped significantly. With HUD's Mortgagee Letter 2009-34 issued on September 23, there was a mandated 10% reduction in the gross dollar amount available. As a result, thousands of seniors in the past 7 days have had their loans locked in under the old HUD formula. Lenders successfully scrambled to obtain the required FHA case numbers before the deadline.
For a 72 year old having a home valued at $400,000, the client would be entitled to approximately $213,000 today using the 5.56% fixed rate option offered by a number of lenders. Yesterday, September 30, the amount available would have been $239,000. This $26,000 difference amounts to approximately11% less money.
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