Daily News

MBA Urges Regulators To Avoid Invoking Suitability Standards
The Mortgage Bankers Association (MBA) recently made a preemptive strike against what it obviously perceives as the next threat against the mortgage industry - "suitability standards." Read more...

 

The Maximum Amount Of Money You Can Get From A Hecm

In some cases, those who apply for a HECM reverse mortgage will try to get the maximum amount possible. There are some rules and regulations that can help you determine that amount, but you need to know some terms that you probably never heard before.

The principal limit is the total amount of money that you will be able to receive in a HECM reverse mortgage loan, no matter how you choose to receive them. At the end of the loan, the money you had received can't be more than the principal limit. The loan balance is the amount that will go to your lender for his services. This is usually around 4% of the total amount when it comes to HUD reverse mortgages.

The principal limit is not always the same. It can be calculated based on three factors: the age of the borrower, the location of the home and the interest rate. If you want to get a HECM reverse mortgage you have to be over 62. After this age, the older you are, the higher the principal limit. Another factor that can modify the principal limit is the location of your home.

The FHA has standard maximum amounts that they can offer to each area. If your house is worth millions of dollars, you probably won't be able to get as much money as you think because you will exceed the maximum claim amount of your location. The expected average interest rate is calculated by your HECM reverse mortgage lender and if the rate is low, you will get a bigger loan. You can even figure out an approximate value of a potential HECM reverse mortgage loan by using a reverse mortgage calculator that you can find online.

Back to Articles