Lawmakers have definitely considered senior citizens when drafting provisions for The Housing and Economic Recovery Act, because the new housing bill allows the elderly to take money out of their home equities through reverse mortgages.

Reverse mortgages allow homeowners aged 62 years and above to convert their home equities to cash. They can either receive monthly checks, or a lump sum free of tax. The amount homeowners can withdraw is based on the home value, amount of any remaining mortgage, homeowner’s age, and current interest rates.

The new law, signed by President Bush last week, increased the maximum amount for reverse mortgages to $625,500, with a 2 percent reduction on fees on the initial $200,000 and 1 percent on the remaining balance, with a $6,000 cap, reduced from the previous 2 percent cap. To cite an example, if you acquired a reverse mortgage worth $400,000, your origination fee will now be $6,000 instead of $8,000.

This will help many senior citizens with income problems stay in and keep their homes; a steady flow of financial resources will benefit people who are past the working age with no regular income. It can help pay for food, medical, and utility bills.

In addition, senior citizens won’t have to worry about paying back the amount they get until they move out of the house, or in the case of their death, when their inheritors sell the house. Such provision allows homeowners to maintain ownership of the title and be protected from eviction. It also prohibits sales people from taking advantage of borrowers trying to qualify for reverse mortgages, as they are not allowed to force borrowers to buy annuities, financial, and other insurance products to be eligible for a reverse mortgage.

Homeowners will never owe more than what their house is worth, regardless of how much money is taken out over the years.

If you want to qualify for a reverse mortgage, find out first what your home is worth by filling out the form on the homepage.