Galen Call Reverse Mortgage Specialist Monterey California

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Galen Call June 9, 2021

Understanding the Principal Limit on a Reverse Mortgage

Principal limit is a unique term with the reverse mortgage and simply translates into how much you can borrow. Assuming the same data is used this number should be consistent from lender to lender. The data includes three critical numbers: age of the youngest borrower, rate, and home value. Here is a brief explanation of how the principal limit is calculated.


The age
considers the youngest borrower or eligible non-borrowing spouse. Older borrowers generally qualify to borrow more or a higher principal limit.  Younger borrowers generally qualify for less. As a side note, the age factor is based on actuarial age: living to 100 yrs. old.


Rates with the HECM loan
are tied to long-term interest rates.  This is the expected rate ( ER)   FHA insures HECM loans, so they consider future rates when calculating a borrower’s principal limit. Expected rates estimate what rates are expected to be in the future, this determines how much money the borrower can receive. The expected rate will determine the principal limit, calculating a borrower’s monthly payments and setting a LESA if needed ( lifetime set aside account.) Expected rates change each Tuesday, tracking the 10 yr. CMT index published by the Federal Reserve.

Your home value is the third factor needed for calculation purposes. All lenders use the lesser of the home value or the HECM limit ( maximum claim) currently at $822,375.

To learn more about reverse mortgages, contact your local certified Reverse Mortgage Professional  (CRMP) for guidance and expertise.

Filed Under: Reverse Mortgages Tagged With: Home Value, reverse mortgage, Reverse Mortgage Limits

About Galen Call

Galen Call is a Certified Reverse Mortgage Professional (CRMP) in Monterey, California. She manages the Reverse Mortgage Division at TreeHouse Mortgage Group, a Division of American Pacific Mortgage Corporation (CALDRE #01215943 | NMLS# 1850). Galen can be reached at 831-645-1164 or by email.

Galen has been originating reverse mortgage loans since 2006 and active in the mortgage lending industry since 2003. She helps clients aged 62 and older with Home Equity Conversion Mortgages (HECM) and proprietary jumbo reverse mortgage loans. Galen brings a proactive and collaborative approach to reverse mortgage lending.

GALEN CALL
Manager, Reverse Mortgage Division
American Pacific Mortgage Corporation
dba TreeHouse Mortgage Group
Call Today: 831-645-1164
Fax: 831-643-1161
Galen@TreeHouseMortgage.com
NMLS #226129 | DRE #00908338
APMC DRE #01215943 | APMC NMLS #1850

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Copyright © 2021 American Pacific Mortgage Corporation. For informational purposes only. No guarantee of accuracy is expressed or implied. Programs shown may not include all options or pricing structures. Rates, terms, programs and underwriting policies subject to change without notice. This is not an offer to extend credit or a commitment to lend. All loans subject to underwriting approval. Some products may not be available in all states and restrictions may apply. Equal Housing Opportunity.

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