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How Much Can You Borrow
The size of reverse mortgage loans is determined by
the borrower's age, the interest rate, and the home's value.
The older a
borrower, the larger the percentage of the home's value that can be
borrowed.
A borrower who uses an FHA-insured Home Equity
Conversion Mortgages (HECM) will receive a reverse mortgage amount based
on a formula which includes a Maximum Claim Amount. In general, this
means the maximum amount you can receive will be determined by factors
including the age of the borrower(s and the appraised value of the
property
(or the maximum FHA
mortgage amount for your area, if lower).
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There are also no restrictions on the value of the homes qualifying for a HUD reverse mortgage. However, the amount that may be borrowed is capped by the maximum FHA Lending Limit for each city and county varying from
$200,160 in rural areas to $362,790 in many major metropolitan areas (and even higher in Alaska, Hawaii & the U.S. Virgin Islands) depending on local housing costs."
You should discuss the formula with your lender and your FHA-approved
housing counselor. The maximum amount that you can receive depends on
your age, the interest rate at the time you close, and the appraised
value of your home. For example, based on a loan at recent interest
rates, a 65-year-old could borrow up to 60 percent of the home's value,
a 75-year-old could borrow up to 70 percent of the home's value, and an
85-year-old could borrow almost to 80 percent of the home's appraised
value --- up to the FHA loan limit for each city and county.
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Line of Credit: You make withdrawals whenever you choose, in whatever
amount you’ve chosen, up to your maximum principal limit.
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Lump Sum:
Take all or any part of the loan at the time you close.
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Tenure Plan: You receive fixed monthly payments as
long as you own and occupy the home as your principal residence. |
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Combination: Within certain limits, you may combine
the lump sum or tenure options with the line of credit.
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When do I repay the loan?
Reverse mortgages are designed to eliminate the burden of making monthly
mortgage payments. The loan will not be due until you no longer own and
occupy your home as your principal residence. At that time, the money
you have borrowed plus the interest and fees will be due and payable.
Generally, borrowers or their estate repay the loan by selling the home.
If the home is sold, you or your estate may keep the proceeds in excess
of the amount due the lender.
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