The The Expanding American Homeownership Act FHA Reform bill passed was Friday by the full US Senate.
The bill passed 93-1 and cuts in half the required down payment for FHA first time homeowner programs.
This bill Expands the FHA Home Equity Conversion Mortgage (HECM) Program maximum loan limit to a national level of $417,000 the current Fannie Mae loan limit, and lowers origination fees from 2% to 1.5%
While the bill has some process to go through before it becomes law, it may become law shortly before or after the new year.
The FHA Bill could be passed within the next eight weeks.
A reverse mortgage pays off current liens on a seniors home, and other equity that is left over is available to the senior in the form of a credit line.
The equity that is available in a credit line grows each year. The growth for the FHA reverse mortgages is half a percent higher than the current rate for the loan. So if the rate of the loan is 4.75%, the growth-rate of the credit line is 5.25%.
Because of this, a higher rate loan might be more appealing to a senior with a large initial credit-line. The difference in growth over the life of the loan is something to seriously consider.
Credit lines can be used for anything, and the money is tax free.