Industry News

Reverse mortgages to have higher loan limits in 2006

Seniors will be able to convert more equity into income, group says

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Next year, older homeowners will be able to convert a greater part of the equity in their homes into tax-free income using a reverse mortgage because of new higher loan limits, a reverse mortgage group said Wednesday. The increases will affect two reverse mortgage products: the federally insured Home Equity Conversion Mortgage,which accounts for 90 percent of all reverse mortgages made in the U.S., and the Fannie Mae Home Keeper loan, the National Reverse Mortgage Lenders Association said. The loan limits for the Home Equity Conversion Mortgage, or HECM, product vary by geographic area, the association said. The highest of the loan limits -- applicable generally to major metropolitan areas -- will grow from $312,896 to $362,790, according to the association. The lowest loan limit, which generally applies to rural and non-metropolitan areas, will grow from $172,632 to $200,160, and HUD must first issue an FHA Mortgagee Letter before the new loan limits take effect, the group said. The...