Jumbo reverse mortgages – currently offered as proprietary reverse mortgages – are similar to the HECM (Home Equity Conversion Mortgage) reverse mortgage as they are both designed for homeowners, 62 or older, to convert a portion of their home equity into loan proceeds. However, with a “jumbo” reverse mortgage, you can access considerably more money from a higher-valued home when compared to a HECM.
FHA insures HECM reverse mortgages on properties valued up to $636,150, so the maximum amount of loan proceeds HECM borrowers are eligible to receive is capped. If your home value exceeds $636,150, you may be better served by a “jumbo” reverse mortgage loan with loan amounts up to $2.25 million.
Considering a Jumbo Reverse Mortgage
For homeowners 62 or older, the HomeSafe® reverse mortgage, offered by Finance of America Reverse LLC, is one of the few jumbo reverse products available to and potentially more applicable, for eligible borrowers who own a property that is valued at $1 million or more. FAR HomeSafe advantages over traditional HECMs:
- Loan amounts of up to $2.25 million, significantly higher than a HECM allows;
- No mortgage insurance premium;
- No initial disbursement limitation – borrowers take the full amount at closing.
The Big Picture for Jumbos
Jumbo reverse mortgage products are starting to be seen as a way for higher-end homeowners to potentially protect their retirement investments. Particularly in areas where home values have appreciated substantially over time, jumbo reverse mortgage proceeds might provide an alternative method for homeowners to remain in their homes and avoid selling other assets unnecessarily.
“Aside from sustaining longevity in retirement, jumbo reverse mortgages can be useful when the market is down and people don’t want to have to take money out of investments. Instead, as financial planning research has shown, they can leave their investments alone to grow over time and use the proceeds from a reverse mortgage to leverage their spending.”1
FAR’s HomeSafe is currently available in AZ, CA, CO, CT, DC, FL, HI, IL, LA, NJ, OR, PA, RI, SC, TX, VA, and WA.
The borrower must live in the property as the principal residence and continue to maintain property charges, including property taxes, fees, hazard insurance. The borrower must maintain the home. If the homeowner does not meet these loan obligations, then the loan will need to be repaid.
If you’re a homeowner age 62 or older, considering the HomeSafe reverse mortgage and would like to learn more about this loan, please contact a Finance of America Reverse mortgage professional today!
1Stramowski, Alana. Reverse Mortgage Daily. June 20, 2016.”Why High Net Worth Retirees are Using Jumbo reverse Mortgages.” http://reversemortgagedaily.com/2016/06/20/why-high-net-worth-retirees-are-using-jumbo-reverse-mortgages/