What is a Jumbo Reverse Mortgage?
It is a home loan that allows older homeowners to access a portion of the equity they have in a high-value property and allows them to defer repayment to a later date.
As a borrower, you have the option to repay as much or as little of the loan balance each month as you would like, or you can make no monthly mortgages payments at all. Of course, you must still maintain the home and pay homeowners insurance and property taxes, just like a traditional mortgage.
What are key advantages of a Jumbo Reverse Mortgage (over a Traditional HECM Reverse Mortgage)?
Access More Equity
Your age, the lending limits, the interest rate, and the appraised value of your home all factor into how much money you would be able to receive with a reverse mortgage.
With a traditional HECM reverse mortgage, the home value limit that can be borrowed against is currently capped at $1,089,300—whereas that limit on a jumbo reverse mortgage can extend into the millions of dollars.
For example, let’s say Harold owns a home that is worth $1.5 million. With a Jumbo Reverse Mortgage Loan, he may be able to borrow against the full appraised value of the home, not the FHA maximum of $1,089,300 as he would with a HECM Reverse Mortgage Loan.
Avoid Paying a Mortgage Insurance Premium (MIP)
Jumbo Reverse Mortgages often have no mortgage insurance premium (MIP), which can reduce the overall loan costs.
With a HECM Reverse Mortgage, the FHA requires that the borrower pays both an initial and ongoing mortgage insurance premium (MIP), which helps make it a non-recourse loan. A non-recourse loan means if the balance on the loan exceeds the home value at the time the home is sold, neither you nor your heirs will be responsible for paying the deficit. This feature on a HECM Reverse Mortgage Loan is guaranteed by the FHA.
While most Jumbo Reverse Mortgages are non-recourse loans, no Jumbo Reverse Mortgages Loans are insured by the FHA.
Less Restrictive Qualifications for Condos
Unlike a HECM Reverse Mortgage, with a Jumbo Reverse Mortgage, condos do not necessarily have to be FHA-approved.