Reasons to Consider Jumbo Reverse Mortgage Loans

May 25

No matter what stage of life you're in, you've got an endless list of things you'd love to do before retiring or settling into your golden years. But, what do you think about paying for them?

FHA Home Equity Conversion Mortgages, commonly referred to as HECMs, are a well-known way to gain access to the equity that has been built over time. The loans are restricted to the maximum loan amount permissible by the Federal Housing Administration (HUD) (FHA). The amount you receive from your loan could be increased. Is it possible to receive a loan when your home has a higher value than average?

How much can you borrow from a reverse jumbo mortgage?

People who own homes valued at more than $400,000 can use a jumbo reverse mortgage, also known as a "proprietary" or "private" reverse mortgage, to gain access to the equity in the homes of homeowners that is greater than what is allowed under FHA HECM lending guidelines. You can keep full ownership and title to your home with a jumbo reverse loan, similar to the HECM. The monthly mortgage payment is optional1, and you have complete discretion over how you intend to spend your loan's earnings. Rather than being offered by a national network of lenders, Jumbo reverse mortgages are crafted and are offered by local credit unions and banks. The jumbo reverse mortgage limits are more substantial for access to more significant equity.

A jumbo reverse mortgage is an excellent option if you have substantial equity within your house. Jumbo reverse mortgages can be an excellent idea for four reasons.

1. More Money to Spend

The main benefit to a jumbo reverse mortgage has the ability to spend more. In contrast to the conventional FHA HECM reverse mortgages, Jumbo reverse mortgages permit the borrower to access more potential proceeds (currently $822,375 in 2021). Our Longbridge Platinum mortgage, for instance, allows you the ability to access up to 4 million dollars in funds.

A higher-priced house typically means a larger cash pot in the bank. Jumbo reverse mortgage loan restrictions are larger than FHA lending limitations, which means you can get more capital in your house. Additionally, jumbo reverse mortgages might allow you to access quickly the total amount of the money derived from the loan.

2. Refinance bigger balances

Using loan funds to pay off greater mortgage balances is among the main advantages of any reverse mortgage. And what is the most prevalent reason that causes American householders to accumulate credit? It is mortgages. The balance of mortgages was $10.04 trillion during the fourth quarter of 2020.

An FHA HECM can be utilized to refinance small mortgage amounts. However, the jumbo reverse mortgage is accessible to refinance significantly more significant amounts. This is a good alternative if you reside in an area where the living costs are high.

3. Lower Closing Fees

If you're thinking about the reverse mortgage option, you're aware of the cost and charges of the loan. There aren't any mortgage insurance costs. Check out our blog if you require an update on the basics. Alongside the reverse mortgage closing charges, borrowers are also responsible for the mortgage insurance premium, including initial and annual payments. The Department of Housing and Urban Development (HUD) requires the mortgage insurance for all loans HECM to protect the borrower and their heirs.

Jumbo reverse mortgage lenders California aren't FHA-insured. Therefore, there is no upfront or annual premiums for insurance for borrowers who use these lenders. Jumbo reverse loans typically have lower closing costs than ordinary FHA HECMs. They are an appealing and cost-effective alternative for those who wish to enjoy the advantages of reverse mortgages but do not need the enormous costs associated with them.

4. Strong protections for Borrowers

Alongside the above, because the Federal Housing Administration does not guarantee jumbo reverse mortgages, there aren't mortgage insurance premiums. These loans offer solid security to borrowers, even though they don’t need to be insured. Non-recourse protection is a standard option for many jumbo reverse mortgages and isn't unusual. Non-recourse loans protect you and your heirs against ever owing to the lender more than the property's value when it is sold.

Jumbo loans can provide borrower protection. However, they are not always guarantee-free. You should ask your lender about the borrower's unique security if you're planning to get a jumbo reverse mortgage.