What is A Jumbo Reverse Mortgage?
A jumbo reverse mortgage is an option designed for homeowners with high-value homes. It fills a void created by the lending limits of the Federal Housing Administration's (FHA) Home Equity Conversion Mortgage (HECM) loan program. Since the HECM program has been designed to suit people with homes valued up to a set amount, it isn't suitable for individuals with higher valued homes. However, with a Jumbo Reverse Mortgage, individuals with homes surpassing that limit can still leverage their home equity for cash.
Jumbo reverse mortgages are a type of Home Equity Conversion Mortgage that enables property owners aged 60 years and older to convert their home's equity into cash without the need to sell the property. In comparison to traditional mortgages, reverse mortgages offer flexibility to homeowners as they do not have a mandatory monthly mortgage payment. You are still responsible to pay your property taxes and home owners insurance while you live in the the home.
What Are the Benefits of a Jumbo Reverse Mortgage?
There are several benefits of obtaining a jumbo reverse mortgage, including:
- High loan limits: If you have a higher value home, a jumbo reverse mortgage enables you to access more cash than you would through an FHA HECM. You may receive higher credit limits, giving you access to a more substantial capital amount, depending on your home's value.
- No monthly mortgage payments: Jumbo reverse mortgages do not demand monthly mortgage payments, freeing up income for other purposes. Property taxes and home owners insurance are still the responsibility of the home owner while they live in the home.
- Flexibility: Unlike a traditional mortgage, a jumbo reverse mortgage has more relaxed guidelines during the application process. Thus, they have more flexibility and lenient requirements, including lower income and credit score requirements. This flexibility enables people worried about getting approved for traditional mortgage to access equity that they can use for many retirement needs.
How Much Can I Borrow with a Jumbo Reverse Mortgage?
The amount you can borrow on a jumbo reverse mortgage is dependent on your home's appraised value, your age, and available interest rate. Loan limits as high as 4 million.
Is It Possible to Refinance My Existing HECM Into a Jumbo Reverse Mortgage?
It's possible to refinance your HECM into a Jumbo reverse mortgage but it depends on the individual lender's policies. If your home has appreciated in value over time and your loan availability size exceeds the HECM maximum loan limit, refinancing may be the best option.
Refinancing your existing HECM to a Jumbo Reverse Mortgage may significantly increase your borrowing power, giving you access to more cash when you need it, especially since the Jumbo loan has higher lending loan limits.
