Reverse mortgages get a limit boost

Starting on Nov. 1, the limit on FHA-backed reverse mortgage will rise to $417,000 nationwide.

Reverse mortgages, officially called Home Equity Conversion Mortgages (HECM), can be used by primary residence homeowners age 62 and older to convert the equity in their home into monthly income or a line of credit that will be repaid when they no longer occupy the home.

Check your qualifications

Homeowners who are 62 years old or older who are currently living in the home and have paid off all or most of their mortgage balances may qualify.  There are no income or credit qualifications since the home is already basically yours, you're just giving the bank a greater share with each payment you receive. You're simply borrowing against the equity in your home.

Use this Reverse Mortgage Calculator from AARP to see if you may qualify.

How HECM Program Works

Homeowners can select from five payment options, according to the U.S. Department of Housing and Urban Development.

• Tenure - Equal monthly payments so long as at least one borrower continues to make the home his or her primary residence.
  
• Term - Equal number of payments for a fixed, pre-specified number of months.
  
• Line of Credit - Unscheduled Payments or installments at times and in amounts of the borrower's choosing until the line of credit is exhausted.
  
• Modified Tenure - Combination of line of credit with monthly tenure so long as the borrower remains in the home
  
• Modified Term - Combination of line of credit with monthly payments for a fixed period of months pre-selected by the borrower.
  

— Sheree R. Curry, MoolahMaven.com

Fed Cuts Rates to Lowest Level Since 2004

The Federal Reserve lowered its key interest rates a half percentage point yesterday, bringing rates down to one full percentage point (1.0%) from 5.25% 18 months ago. Rates are now at their lowest level since June 2004. The move should help prevent the U.S. from tipping into a recession as our worst financial crisis since the Great Depression drags on. 

In typical econ-lingo, the Fed said in a statement, "In light of the declines in the prices of energy and other commodities and the weaker prospects for economic activity, the Committee expects inflation to moderate in coming quarters to levels consistent with price stability.

In other words, the Fed hopes its move will help improve the economy. — Sheree R. Curry, MoolahMaven.com

Mortgage interest rates down, loan apps up

Interest rates on 30-year fixed rate mortgages dropped to 6.26 percent from 6.28 percent the previous week, according to data released yesterday by the Mortgage Bankers Association. Applications for loans were up 16.8%. Source: MBA.

The Fed also reduced rates again this week, meaning mortgage interest rates just might go down again in the next week or so. If you're looking to buy a home, be sure to lock in your quote, but with an option to move downward should rates continue to fall. — Sheree R. Curry, MoolahMaven.com