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The new housing bill is not just about helping homeowners avoid foreclosure, according to a MarketWatch story. It also significantly raises the amount of cash that can be pulled from reverse mortgages, which could help seniors who are considering this strategy as a way to help supplement living expenses. Keep in mind that any decision about taking out a reverse mortgage requires a lot of research to find out if it’s right for you.

The Housing and Recovery Act of 2008 is going to affect more than first time home buyers, it will affect seniors too.

When the President signed into law a $300 billion housing bill to help homeowners renegotiate their mortgages, reverse mortgage lenders reignited their marketing programs focusing on seniors, says Frank N. Darras, the nation’s leading disability and Long-Term Care insurance lawyer.

Here is what you need to know:

The increasingly popular reverse mortgage has been shopped by lenders and targeted at homeowners over 62. The intrigue of such mortgages has been that as you age, you can have “your house pay you.” The convincing argument is that reverse mortgages can be used to pay for living expenses, prescription drugs, health care, or to pay off an existing mortgage.

Today’s reverse mortgages are called Home Equity Conversion Mortgages (HECMs) and are insured by the Federal Housing Administration. HECMs allows folks to tap home equity and not have to make monthly payments. The HECM has been limited to the value reflected in a home’s appraisal, the range and loan limits recently were between $200,160 and $362,790, depending on the location of the home.

That is going to change. The new bill is intended to significantly increase the amount a borrower can get and lenders are dangling a golden carrot with phrases like “Seniors may be able to borrow as much as $625K in home equity to use any way they please!”

Source: Business wire