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Is HUD Loan Limit in Your Area Rising? Try to Refinance Your Reverse Mortgage Loan

hud-guidelinesHas HUD loan limit in your area risen? What if your spouse -with whom you took a HUD loan-, has passed away and you can’t afford to pay the monthly loan installment? Or perhaps you have just received a payment and want to change to a line of credit? Can you refinance your reverse mortgage loan? Well, the answer is yes. But you need to contact your lender and they’ll probably question about your motivation to do the refinancing.

If you have just received a payment and want to change to a line of credit, your loan lender may require you to pay a small fee so you could change your existing loan and not have to incur any additional costs for a new loan. If the limits had not changed since you did your initial loan, it is probably won’t make any sense to look into refinancing.

But if the case is like this: you took an annual adjustable rate years ago. Your spouse has passed away just a few months back, and the HUD lending limit in your area had gone up a excellent deal, it makes sense for you to refinance into a new monthly adjustable reverse mortgage loan. You are most likely to need extra income after your spouse has passed away. But you are not aware yet that the HUD has its guidelines regarding refinancing reverse mortgage loan.

Yes, there are certain HUD guidelines that you have to know before refinancing your reverse mortgage loan:

The HUD has a Five Times Benefit rule to determine whether you need to go back through counseling again or not.

What is the Five Times Benefit? It is a HUD guideline that means you have to take all the costs incurred to do the new loan and multiply those by 5 and if you aren’t receiving at least 5 times or more this much money with the new loan over the ancient loan, then you must attend counseling.

It doesn’t mean you can’t get the loan. You are required to attend the counseling program to make sure that you know the program.

The amounts of money you need to spend are the same costs as when you got your first reverse mortgage, i.e: title, appraisal, escrow, and origination fee among others, except the mortgage insurance.

The mortgage insurance that you have paid off is transferred to the new loan so only the difference from the ancient level to the new level is what you have to pay on a refinance.

Here’s an example: If all the costs for your new loan would total $10,000, then you would have to net $50,000 more on the new loan. There is a formula that lenders have to follow per HUD Guidelines which also accounts for servicing set-asides but for simplicity sake, this is a simplification of the policy. If your previous mortgage insurance was based on a lending limit of $200,000 and the new limit was $225,000, then the mortgage insurance would be 2% of the difference between the two, or $500 instead of the $4511.11 it would normally cost. You already paid the other $4,011.11 on the first loan and HUD will not charge a second time for the new refinance.

But, if the HUD limits in your area has changed or you have encountered a change in life, it may make sense to look into a refinance. Talk to your trustworthy HUD lender to know about HUD guidelines and see if you can gain benefit from refinancing. You can start it right now here!

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This entry was posted on Tuesday, April 14th, 2009 at 7:38 pm and is filed under HUD. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
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One Response to “HUD Guidelines”

  1. Complete HUD Guidelines Information, tips and Guide Right Here … | Fund Loans - Sheperdstown says:
    April 15, 2009 at 5:57 am

    [...] rest is here:  Complete HUD Guidelines Information, tips and Guide Right Here …SHARETHIS.addEntry({ title: “Complete HUD Guidelines Information, tips and Guide Right Here [...]

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Tags: HUD Guidelines,  hud lender,  hud limits,  HUD Loan,  hud loan limit,  refinancing reverse mortgage,  Reverse Mortgage, 

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