Contour Mortgage Corporation explains how the FHA, Federal Housing Administration, and the HUD, Dept. of Housing and Urban Development, have helped the HECM, Home Equity Conversion of Mortgage, to increase benefits for homeowners.

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Refinancing a Reverse Mortgage
Established by Congress in 1983, the Home Equity Conversion
Mortgage (HECM, aka reverse mortgage), has helped hundreds of
thousands of homeowners age 62 and over to live richer lives. These
homeowners have benefitted from accessing cash from their hard earned
home equity with no required monthly payments.
Over the years, the Federal Housing Administration (FHA) and the
Department of Housing and Urban Development (HUD) have improved
the HECM to benefit the homeowner. One of the greatest improvements
was the increase in loan limits which allow the homeowner to access
more of their home equity than before. This means that current holders
of a reverse mortgage who live in higher value homes now may qualify
for even more cash by refinancing the original loan. A good thing just
got better!
For years, HUD annually adjusted county lending limits to keep
pace with increasing home values. Responding to the requests of many
homeowners, in July of 2008 the FHA lending limit was raised across
the board through the Housing and Economic Recovery Act of 2008.
What does this mean for you? It means now you may be able to get
more cash from your home than when you got your original reverse
Mortgage-making a refinance
an exciting new option.
Let's look at an example: A
70 year old homeowner in
Brevard County, Florida, took
Out a reverse mortgage in
Early 2008. At the time his
House was worth $725,000
And had a $105,000 mortgage
Balance. Also at that time,
The FHA lending limit for a
Reverse mortgage in Brevard County was $221,350, meaning the FHA
Would not even consider the other $503,650 of his home's value when
Determining how much equity he could access and turn to cash. That was
Fine with him, though, because he still could access enough money to
Pay off his existing mortgage, freeing him of the burdensome $1,200 a
Month Mortgage payment. Life was good-but still he wished he could
Access even more of his home's equity, for home improvements, paying
Down credit card debt, and taking a trip to see his grandchildren.

2. Now, fast forward to 2009. Real estate values have plummeted and our
borrower's home is worth $525,000, down from $725,000. Along comes
the Stimulus Package and HUD/FHA raises the HECM lending limit across
the board. Our happy homeowner now chooses to refinance his reverse
mortgage. With the new lending limit the full value of his home will be
considered when calculating how much of his hard earned equity he can
access with no monthly payments-this time a whopping $290,000-nearly
three times the amount he got with his first reverse mortgage.
As an added benefit, some closing costs are reduced or eliminated entirely
when refinancing, making even more money available. After paying off the
first reverse mortgage balance ($105,000 plus the finance closing costs and
accrued interest our homeowner still has between $120,000 and $170,000
(depending on an adjustable or fixed rate) available to use for anything he
chooses, and that even considers how much his house has lost value!
In addition to getting more money, many
homeowners who qualify to refinance have found
another benefit of a Home Equity Conversion
Refinance-the Annual Libor 2.75% Rate.
Until now, the overwhelming majority of
reverse mortgages were adjustable rate programs.
Today the fixed rate program often allows you to
get more money than the adjustable rate programs,
with the peace of mind of a fixed interest rate.
Right now may not be smooth sailing for our economy, but for many
homeowners who qualify to refinance their reverse mortgage, the possibility
of accessing more equity plus the peace of mind of a fixed rate are making a
HECM refinance an option to consider.
Every situation is unique. Find someone who will take the time to go over
all your options with you and find out what makes the most sense for you.
Refinancing a reverse mortgage can provide you with a lot of benefits-but
never forget it is all about YOU. It should be done only if it truly benefits you
and puts you closer to what you want to accomplish.
For more information
and a FREE QUOTE,
please call toll-free
1-516-385-6926