Home values have been ballooning in recent years. The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, which covers all nine U.S. census divisions, reported a 19.5% annual gain in September 2021! The prior year period from September 2019 to 2020 the same area reported a 19.1% annual gain. In response to these dramatic increases in home price appreciation, the FHA has decided to increase their cap on lending limits for the Home Equity Conversion Mortgage (HECM) Reverse Mortgage (RM) program. The cap on the program limits the accepted appraised value on the RM. For example, if a home were to appraise at $1,000,000 under the current cap of $822,375, the HECM RM loan would only calculate the money qualified based on a value of $822,375; this cap limits the value that can be used to determine qualification. A 62-year-old borrower may qualify for around $393,917 before fees (2% of the loan limit plus an addition $4,500 for escrow and loan fees) on a million-dollar home.
Effective for all FHA case numbers assigned on January 1st 2022 or after, the new cap on the HECM RM program will be $970,800. For example, under the same $1,000,000 appraised home value this same person would now use a qualifying home value of $970,800, an increase of appraised value of 18% from the previous cap. A 62-year-old at $1,000,000 appraised value may qualify for $465,012 in money available to pay off any existing loans, to cover the new loan fees and any remaining money would be available to the borrower (s). Needless to say, this increase in the RM limit is a welcome change for any borrower to improve their standard of living and provide necessary funds for an updated kitchen, home modifications, helping grandkids with college, or just some extra funds to cushion life’s unexpected events. If you would like to look into accessing your home equity you may contact Robert Krepps firstname.lastname@example.org or toll-free at 877-567-7476.
Robert Krepps, NMLS #255191, at HighTechLending Inc. HighTechLending Inc, NMLS # 7147, is an Equal Housing Lender. Licensed by the Department of Financial Protection and Innovation under the California Residential Mortgage Lending Act.