You may be able to get more benefits that way. You do not have to re-pay any mortgage insurance premium that you have already paid (as long as this is your first refinance), so if your property is worth more now or if you did receive lower benefits before due to the HUD lending limits in different areas, you might qualify for a refinance at reduced costs. To be eligible, HUD requires you to receive at least 5 times the loan cost in new benefits with the new loan. If you did a loan with a monthly servicing fee or a higher mortgage insurance renewal premium, you could also eliminate that fee or lower that premium. If these circumstances are true for you, you may be an ideal candidate for a HECM to HECM refinance. In those cases, borrowers could not use all their equity on the first loan since the house was worth more than the lower HUD maximum claim amount. This is especially true if your home was worth more than the Maximum Claim Amount when you did your first loan. If you live in an area that has experienced growth in real estate values in the past 18 years, you may have an excellent opportunity to tap back into that appreciation. I don’t know the value of your home currently, but many houses have seen significant amounts of appreciation since 2006. As I told you, HUD has raised the Lending Limit (or Maximum Claim Amount) to a current limit of $1,089,300 starting in January 2023. However, I may be able to offer a ray of hope. Without knowing how much you owe on current liens at the time and how much you drew from the loan annually, I could not give you a helpful comment on whether, realistically, there would be any money left on the original line. Otherwise, the system cannot account for draws and numbers about which it has no information. The amortization schedule you received with your loan when you first signed your documents would have shown you how long the line would last and how the balance would rise, but only if you advised your lender how much you planned to draw yearly so they could run that number for you. Just for the record, though, I have seen several simulators where the funds available to the borrower exceeded the original maximum claim amount, but that was in the case of borrowers who had no liens to pay off and allowed the line to grow for 6 to 7 years with no draws whatsoever. This growth of the line allowed you to ultimately borrow more total dollars than if you had borrowed all your available funds at one time…although even with the growth in the line of credit, you may not be able to borrow to your Maximum Claim Amount. The benefit amount or your loan amount is also known as the Principal Lending Limit, and this is the amount you receive based on your parameters.įrom this Principal Lending Limit, you would subtract any mortgage or other liens you had to pay off, any costs you incurred for the loan, and the remaining funds would be available for you to take as a lump sum, as a monthly distribution, to leave in a line of credit and take as you desire or as a combination of any or all of those options.ĭepending on how quickly you used the loan in the early stages, the balance available grew over time on the unused portion. If you had a Maximum Claim of $250,000 at the time you took out your reverse mortgage, that would mean that your property either appraised for that amount or that was the HUD maximum for your area at the time (if your loan closed before the nationwide move to a $417,000 maximum claim amount). Your home can be valued higher, but that is the most that will be considered for the reverse mortgage benefit or loan amount. It is set to increase again in 2023 to $1,089,300.īut again, those are the maximum claim amounts and not the loan amounts that borrowers receive when they get their loans, and it is not the maximum your property can be valued to be eligible for the loan. We now know that the “temporary increase” because of the American Recovery and Reinvestment Act of 2009 remained in effect until property values increased enough so that the HUD limit grew above and beyond this level with home appreciation to the current level of $970,000. The Maximum claim on the reverse mortgage in 2021 would have been the lower property value or the HUD lending limit, not the maximum amount you can borrow. You use the term “Maximum Claim” and give $250,000. I would be happy to go over your individual information with you.įirstly, there are a lot of terms with a reverse mortgage that is not like or even used in a standard or forward mortgage. Without seeing your closing documents or even your Loan Comparison Page, I can only guess what is going on here but let me take a stab at it, and if this does not seem to come anywhere near your circumstances, please feel free to contact me.
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