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.

For homeowner Wilma Johnson, a part owner in a struggling commercial flooring company, the cavalry arrived just in time. At 64, her business was humming along until the commercial market slumped at the beginning of 2008. Now, jobs are harder to come by and she struggles to pay her monthly bills. Like most Americans, Mrs. Johnson’s mortgage payment is her largest bill. Her $220,000 mortgage eats up close to $1,500 of her monthly take home income.

There is no telling when Mrs Johnson’s flooring business will return to pre-2008 levels. It is a big unknown? Based upon this she opted to move forward with a reverse mortgage that completely eliminated her monthly mortgage payment. She still has a mortgage but the monthly burden is gone.

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.

With the new lending limits in place many senior borrowers will realize a dramatic increase in their monthly income. Technically speaking they won’t see income increasing, rather the giant expense of the mortgage payment will be eliminated. The borrower sees that as a net increase in disposable income to be used for other important life reasons.