For many retirees, home equity is one of their greatest assets. Homeowners – age 62 and older – with higher-end properties have turned to proprietary “jumbo” reverse mortgages to unlock this valuable source of housing wealth, and for a variety of reasons.
The majority of reverse mortgages available on the market today are Home Equity Conversion Mortgages (HECM), which are insured by the Federal Housing Administration. While many American retirees have successfully utilized these products, conventional HECMs are not applicable for particularly high-end homes.
Here are three reasons to CONSIDER a jumbo reverse mortgage.
1. Your home value is greater than $626,150.
FHA insures HECM reverse mortgages on properties valued up to $636,150, so the maximum amount of loan proceeds you may be eligible to receive from a HECM is capped. If your home exceeds the $636,150 lending limit, you may be better served by a “jumbo” reverse mortgage loan.
2. You can access more funds.
Proprietary jumbo reverse mortgages, which are not FHA insured, are privately insured by the companies that offer them. These products are often called “jumbo” loans because they allow borrowers to access significantly higher loan amounts compared to traditional HECM reverse mortgages.
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 borrowers who either own or a looking to purchase a property that is typically valued at $1 million or more.
Offered exclusively by Finance of America Reverse, the HomeSafe jumbo provides loan amounts up to $2.25 million which is substantially greater than FHA’s $636,150 HECM limit.
3. You may tap into home equity from a higher-end condo.
Retirees living in condominiums may also take advantage of reverse mortgages, however, not all condos are FHA-approved to be able to utilize HECM financing. A unique distinction of jumbo reverse mortgages is that condos appraised at $500,000 or more do not require FHA approval, which allows them to be potentially eligible for a HomeSafe jumbo loan.
The homeowner must live in the property as the principal residence and continue to maintain property charges including property taxes, fees, hazard insurance and 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 and older considering a jumbo reverse mortgage and would like to learn more about this loan, please contact a Finance of America Reverse mortgage professional today!