New Mortgage Rules Help Seniors

   

Posted: Oct 21, 2010

New reverse-mortgage rules from the Federal Housing Administration (FHA) may help senior homeowners in need of retirement cash. Congress recently passed legislation extending the limit on these federally-insured mortgages to $625,500. Under the new rules, the mortgages aren't limited by credit score or income requirements and only require homeowners to maintain the existing property.

"These new changes make reverse mortgages accessible by an ever-wider range of Americans," said Ethan Ewing, president of Bills.com. "Reverse mortgages aren't for everyone, but for the right homeowner, they remain a powerful tool for paying unforeseen retirement expenses."

The mortgages use equity already built up in homes, exchanging it to secure upfront cash, monthly payouts, or a combination of both from the lender. Interest accumulates on the loan, but no additional payments are necessary until the home is sold or a homeowner death occurs.

In addition, changes have also been made to the FHA's Home Equity Conversion Mortgage, allowing owners to borrow smaller amounts against their property than would have been available under the previous legislation.