New Reverse Mortgage Limit

As part of the recently passed Economic Stimulus Bill, the loan limits on Reverse Mortgages have been raised to $625,500. The previous limit was $417,000 based on the Fannie Mae/Freddie Mac conforming loan limit. The new limit is set at 150% of the Fannie/Freddie limit, so it will adjust with the conforming loan limit.

This is a huge jump for us here in Josephine County where the limit has gone from about $271,050 to $417,000 and finally to $625,500 in a matter of months.

What this means is that seniors can access more of the equity in their homes. In our area it seems that many of the most expensive homes are owned by retirees, and the previous loan limits represented a small fraction of those values. Now more people can get a reverse mortgage large enough to pay off their existing loans and maybe even leave them with some extra cash.

While this improvement won't do much for the housing market, the extra cash it frees up for seniors could translate into much needed consumer spending in the larger economy. Also, a reverse mortgage can be a great tool for avoiding foreclosure, and the higher limit makes that option available to more people.