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Reverse Mortgage “Fall” Changes

Falling (decreasing) LTVs (Loan to Values) are not a good thing for borrowers.  The LTV is the loan amount divided by the appraised value. 

FHA has had increased delinquencies with their Reverse Mortgages.  For this reason, FHA (or HUD) has increased the MIP (Mortgage Insurance Premium) and decreased the LTVs (Loan to Value).   The decrease in the LTV on Reverse Mortgages is a major change for borrowers.  This change occurred at the end of September.  This decrease in LTV means that the maximum a person can borrow has been reduced.  The reduction is significant and averages about 10%.  This means that the average person that qualifies for a Reverse Mortgage on a $150,000 property will now have their loan amount reduced by $15,000.     

The chart below provides an example of the lower LTV. 

There are other factors that are also used to determine if a person qualifies for a Reverse Mortgage and at the listed LTVs.  All borrowers should seek additional information from a licensed mortgage lender.

 

 

 

Age

New Principal Limit

 

 

Current

Standard

 

LTV Decrease

62

0.526

 

0.619

-0.093

63

0.531

 

0.625

-0.094

64

0.535

 

0.629

-0.094

65

0.541

 

0.637

-0.096

66

0.546

 

0.642

-0.096

67

0.551

 

0.648

-0.097

68

0.554

 

0.652

-0.098

69

0.560

 

0.659

-0.099

70

0.564

 

0.663

-0.099

71

0.570

 

0.671

-0.101

72

0.575

 

0.677

-0.102

73

0.579

 

0.681

-0.102

74

0.586

 

0.689

-0.103

75

0.589

 

0.693

-0.104

76

0.593

 

0.698

-0.105

77

0.597

 

0.702

-0.105

 

 

 

 

78

0.600

 

0.706

-0.106

79

0.607

 

0.714

-0.107

80

0.610

 

0.718

-0.108

81

0.615

 

0.724

-0.109

82

0.621

 

0.730

-0.109

83

0.625

 

0.735

-0.110

84

0.630

 

0.741

-0.111

85

0.635

 

0.747

-0.112

86

0.641

 

0.754

-0.113

87

0.646

 

0.760

-0.114

88

0.650

 

0.765

-0.115

89

0.654

 

0.769

-0.115

90+

0.660

 

0.776

-0.116