More Money is now available for senior clients as the New Reverse Mortgage 2021 maximum claim limits have been released.  Those older Americans that have properties valued in excess of $765,600 can begin using the HUD HECM so they do not have to utilize a Non-HUD Reverse Mortgage Program.  As a Certified Reverse Mortgage Professional, Richard Woodward can provide guidance and no obligation written proposals to demonstrate the opportunities that are offered with the NEW Reverse Mortgage.

HUD announced in Mortgagee Letter 2020-42 that the Maximum Claim Amount will increase to $822,375 for case numbers ordered on or after January 1, 2021. This is a $56,775 increase (7.4%) in the value that can be used to create a Reverse mortgage benefit for senior homeowners that have homes valued greater than $765,600.  The maximum claim amount is normally equal to the appraised value of the home but can not exceed the new limit of $822,375.  If the value does exceed that amount, borrowers are forced to use non-FHA insured loan programs.

Here are some examples of the benefits of the new higher FHA Reverse Mortgage limits.

Example 1

Home Value = $1,000,000 Borrower’s Age = 65

Benefit with 2020 Max Claim Limit = $414,955

Benefit with NEW 2021 Max Claim Limit = $445,727

Example 2

Home Value = $1,000,000 Borrower’s Age = 70

Benefit with 2020 Max Claim Limit = $440,985

Benefit with NEW 2021 Max Claim Limit = $473,688

Example 3

Home Value = $1,000,000 Borrower’s Age = 75

Benefit with 2020 Max Claim Limit = $460,125

Benefit with NEW 2021 Max Claim Limit = $494,247

The above examples use the CMT Monthly Adjustable with a 2.25% margin which, as of the date, produces the maximum benefit available on the HUD HECM.

The exact amount will be determined by the Principal Limit Utilization.  Margins from 1.625% to 3.25% are available.  The higher margins will produce less benefit to the borrower and will increase the accrual interest rate.