Many homeowners were accutely aware of the Housing and Economic Recovery Act signed by George Bush on July 30. The act was a media magnet as it sought to bail out the ailing mortgage industry. A little talked about portion of the Act also raised the national reverse mortgage lending limits to $417,000.

The former limit for most parts of the country was $200,160. As of November 6, 2008 reverse mortgage lenders began funding reverse mortgages with the new lending limits.

Those helped most by the new law are those with homes valued over the former lending limits. Banks will loan these homeowners up to twice the amount as before the law’s enactment. Even better, lender fees are reduced as a percentage of the home.

Wilma Johnson has ownwership in a commercial flooring company. Prior to the beginning of 2008 business was thriving. “The phone was ringing and we kept answering it”. In the beginning of 2008, the phone stopped ringing as the commercial market died off. Now, one year later, at age 64, Mrs. Johnson is having trouble managing to pay her bills on time. It’s not uncommon to dip into savings from time to time. Her $230,000 mortgage on her home takes up to $1,400 per month of her income.

With many unknowns in the commercial marketplace, she is unsure when her income will return. With that in mind Mrs. Johnson exercised the option to completely eliminate the burden of her mortgage payment by refinancing her home with a reverse mortgage.

Many myths surround the reverse mortgage. One such myth is that in order to get a reverse mortgage the borrower must own their home free and clear.

The truth is that well over sixty percent of senior candidates for a reverse mortgage are looking into it for the express purpose of paying off a current forward mortgage. They have the same issue as Mrs. Johnson. The mortgage payment is difficult to handle.

The new law comes as a boon to many 62+ homeowners with mortgage amounts in excess of the former lending limits. Now, these same homeowners can use a reverse mortgage to pay off their mortgages to free up much needed monthly income for other life expenses.