First of all, A HECM Loan Limit Increase isn’t always guaranteed. In fact, they didn’t change in 2011, 2012, 2013, 2014, 2015, and 2016. During these years it was set at $625,500 and then they changed it slightly in 2017. At that time HUD increased it to $636,150.00. Not only will we share what the new 2018 reverse mortgage loan limit is, but we’ll also discuss how it works for a reverse mortgage.
The new HECM Loan Limit is set to increase to $679,650 for any case number issues on or after January 1st, 2018.
How Exactly, does the HECM Loan Limit Work?
Be careful not to confuse the HECM Loan Limit for an loan amount limit. A reverse mortgage borrower can’t actually borrow $679,650.00. The HECM Loan Limit is just the maximum appraised value that’s considered or used.
With a reverse mortgage, the amount you qualify to get is based on three things:
First, it’s based on the youngest borrower’s date of birth.
Secondly, the amount you can borrow with a reverse mortgage is based on the value of your home.
Third, the percentage of equity you can access is also based on something called the (expected interest rate). This changes weekly, which also means that what any given individual can borrow, also changes weekly.
Example of How the HECM Loan Limit Works
Let’s say that based on the age and appraised value along with any given week’s EIR (expected interest rate), a borrower is able to borrower 50% of the value of their home. They’d get $50k if their home is worth $100k. They’d get $100k if it’s worth $200k. This goes on and on until your borrower’s home value is $679,650 (again, this is the max appraised value considered). Still using the 50% LTV factor, the homeowner that has a home worth $679,650……….and anything more they’d get $679,650 x .5 = $339,825.
***Disclaimer, Reverse Mortgage Loan Advisors is for informational purposes only. It’s not a bank, it’s not endorsed by HUD or FHA. When you elect to contact us for more information, you will be connected with a properly state licensed reverse mortgage specialist.
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