You might not have heard the term “Jumbo Reverse Mortgage” before, but they are more common than you may think! A larger spin on the original “reverse mortgage“, a jumbo reverse mortgage gives you access to more funds if you and your home are eligible.
If you have looked into reverse mortgages before, you have seen the terms home equity conversion mortgage or HECM loans. To clear up confusion, these all mean the same thing!
Regular reverse mortgages are a loan administered by the Federal Housing Administration tailored towards seniors that allows you to utilize a portion of your home’s equity to supplement your income. Most reverse mortgages are used as a way to have more financial freedom, but they can also be used as funds to purchase a new home. FHA Insured Reverse Mortgages leave loan borrowers responsible for:
- Property taxes
- Homeowners insurance
- Property maintenance
Traditional reverse mortgages are great because they allow you to stay in your own home, halt your monthly mortgage payments, and award you more financial freedom. A traditional reverse mortgage loan is applicable to homes valued under the appraisal value of $726,625 and for borrows over the age of 62.
Many people who own homes valued over this price are beginning to utilize jumbo reverse mortgages to tap into their home’s high equity value.
What is a Jumbo Reverse Mortgage?
To begin our discussion of eligibility, let’s get familiar with what a jumbo reverse mortgage is.
A jumbo reverse mortgage is similar to a regular reverse mortgage, but it is for homes valued at a higher price point. If you are looking into a jumbo reverse mortgage loan, you must meet several criteria to be considered eligible. These criteria include:
- Your home property value
- Your mortgage balance
- Your age
Also known as “proprietary reverse mortgages”, jumbo reverse mortgages work to harness your property’s equity in order to allow you to stay in your own home, give you more financial freedom, and help you live stress-free in your senior years. Now let’s dive deeper into the criterion of jumbo reverse mortgage loans.
One of the jumbo reverse mortgage limits is your property value. A jumbo reverse mortgage is a specialty reverse mortgage for homes that have an appraisal value over the Home Equity Conversion Mortgage limit of $726,625. This is perfect if you have a high value property!
High-value properties allow you to tap into larger home equity, which through a HECM loan, will provide you with more financial freedom. Jumbo reverse mortgages have loan limits of $6 million worth of a borrower’s home’s equity!
If this is your primary residence and your home is valued at over $726,625, it is time to look at the next step of eligibility.
You must calculate your existing mortgage balance because this will play a part in your jumbo reverse mortgage eligibility. This will give you an idea of how much of your mortgage you have left to pay off.
When you have a proprietary reverse mortgage loan, you will no longer have to make a monthly mortgage payment. The funds you receive from your loan proceeds will help you pay off your mortgage balance.
Since jumbo reverse mortgages are reserved for seniors, you or your spouse must be 62 years of age or older to qualify.
Jumbo reverse mortgages allow persons of this age to help their children purchase a property, start college funds for grandchildren, and establish a trust fund–to name a few! Since a jumbo reverse mortgage has a larger payout than a traditional reverse mortgage, you are allotted more funds to pay off debts and spend your money as you choose.
Benefits of Jumbo Reverse Mortgages
There is a reason jumbo loans are a popular road to take among seniors. There are many benefits of a jumbo loan. We dive into specific examples of these benefits below:
Eliminate Payments on a Larger Mortgage Balance
Jumbo loans allow retirees to pay off their mortgage monthly payments while simultaneously maintaining their lives in a high cost living area. Since jumbo loans can be an income supplement, seniors are able to utilize these funds to no longer actively pay monthly mortgage payments.
This allows you to allot money for vacationing, purchasing vacation properties, and other investments you have always wanted to be involved in!
Immediately Access Funds
Although traditional reverse mortgages do award you with more financial freedom, there are limits to this freedom. Regular HECM loans limit the number of funds accessible to borrowers within the first year.
Jumbo loans allow you to access loan proceeds immediately after the loan closes. This means you can start spending your money on the things you want immediately! Is there a car you’ve always wanted to own? Now is your perfect time to buy!
No Mortgage Insurance Premiums
Unlike regular reverse mortgages, jumbo reverse mortgages do not require you to pay upfront and ongoing mortgage insurance premiums. This is because they are not FHA-insured.
A mortgage insurance premium is a payment made by homeowners who are taking out loans backed by the FHA government agency. Since a jumbo reverse mortgage is not FHA-insured, you will not need to pay a mortgage insurance premium.
No High Interest Rate Increases
As of now, jumbo reverse mortgage programs are fixed rate loans. This means that your loan interest rate will be increasing at a predictable rate. You will not need to worry about interest rate hikes, which is one more reason a jumbo reverse mortgage can take stress off your shoulders.
In order to qualify for a Federal Housing Administration HECM Loan, you will need to complete a Housing and Urban Development (HUD)-approved housing counseling to ensure that you are prepared for the process of HECM loans. This will help you better understand what a reverse mortgage is and what to expect during the process.
Get A Free Quote
You should utilize jumbo reverse mortgage lenders that you trust.
Devin Fahrner of Idaho Reverse Mortgage is one of the jumbo reverse mortgage lenders you can rely on. Fahrner and team specialize in the mortgage and consumer finance industry to provide families with the knowledge they need to determine if a reverse mortgage is right for them.
If you are looking to start a jumbo reverse mortgage with your home, visit the Idaho Reverse Mortgage website today to check your eligibility and get a free quote!