principal limit

principal limit

The maximum lifetime amount an elderly borrower can take out on a reverse mortgage.Calculation of the principal limit is a formula that uses the age of the youngest borrower,the maximum claim amount (the lesser of the house's appraised value or the FHA's maximum loan amount for houses in the area),and the expected average mortgage interest rate.

Principal Limit

The present value of a house, given the elderly owner's right to live there until she dies or voluntarily moves out, under FHA's reverse mortgage program.

See Reverse Mortgage/FHA's Home Equity Conversion Mortgage (HECM)/Principal Limit.

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References in periodicals archive ?
Loan amounts are determined by the HUD's principal limit factor tables, which take into account age, home value and interest rates.
A lower expected rate means a larger initial principal limit that grows at a lower rate than if interest rates were higher.
For disbursements of 60 percent or less of the principal limit, an additional one-time MIP is 0.
The computers, radio transmitters, and other electronics on the glider are powered by alkaline batteries, which are, for now, the principal limit on the length of operation.
The homeowner can request a loan advance at any time (prior to death, moving, or selling the home) up to the amount of the principal limit.
The principal limit to the usefulness' of these pads is that particularly restless sleepers tend to shove them out of the way, since they are not secured to the mattress.
The amount a client can borrow against their equity is determined by their principal limit factor, which is, in turn, influenced by age, mortgage insurance premiums, mortgage rates and a financial assessment conducted by the lender.
The servicer receives a report that includes an estimated principal limit after paying off current liens, servicing fees, originations fees, mortgage insurance and estimated closing costs, explained Gilster.
These homeowners typically receive a reverse mortgage with an average maximum principal limit of $159,000 against a home valued at $289,000.
Unable to compete: With no new technology, calculations such as the principal limit factor will need to be done by hand.
This option is available when the outstanding principal balance reaches 98 percent of the maximum claim amount, which is the lesser of (i) the appraised value of the home or (ii) the maximum principal limit set by HUD under Section 203(b)(2) of the National Housing Act for single-family homes in the county in which the property is located.
Assuming there are no title problems and existing debt on the property does not exceed the net principal limit or maximum claim amount, and the borrower does not have a default on a debt owed the federal government, the credit underwriting is essentially irrelevant.

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