Jumbo Reverse MortgageReverse Mortgage Loan Advisors

What Is A Jumbo Reverse Mortgage?

If you’re investigating reverse mortgages and have a higher end home, you may be wondering “what is a jumbo reverse mortgage?”.  Generally, a regular jumbo mortgage usually has a set loan amount.  For example, in 2018 the conforming loan limit is $453,100 in most areas.  In High Cost areas, the limit is $679,650.  Anything that exceeds these amounts would be considered a jumbo loan amount.

What Is A Jumbo Jumbo Reverse Mortgage
What Is A Jumbo Jumbo Reverse Mortgage

First, The Reverse Mortgage Basics

A reverse mortgage is a type of home loan that can only be funded for homeowners that are 60 years of age or more (Used to be 62 plus).  At this time, they can only be done on your primary residence.  The great part is, there are no mortgage payments.  Yes, no payments for as long as you live or for as long as  you reside in your house.  You still own your home when you do a reverse mortgage, so you’ll still need to pay property taxes and insurance.

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What is a Jumbo Reverse Mortgage and What Are The Jumbo Reverse Mortgage Loan Limits?

A jumbo reverse mortgage is a type of reverse loan that is used if the FHA version doesn’t provide high enough loan proceeds to pay off what the homeowner currently owes.  A jumbo reverse mortgage can also be used on free and clear homes.  However, in many cases it can only be used if it provides a larger loan amount than the FHA reverse loan.  The jumbo reverse mortgage can really only be used if the amount you can get is greater than the amount you can get on an FHA reverse mortgage.  The percentage lent on the jumbo reverse mortgage is pretty conservative.  Hence, the amount you get isn’t always more than what you’d get with the FHA version.  Usually, the jumbo reverse mortgage isn’t a viable solution unless your home is worth $700,000 to $1,000,000 or more.  It would just depend on your age (age of the youngest spouse if married).

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Jumbo Reverse Mortgage Limits
Jumbo Reverse Mortgage Limits

 

The Jumbo Reverse Mortgage Limits

When it comes to the jumbo reverse mortgage loan limits, it’s a little different than with a regular loan.  With a regular loan, it’s a set number.  With a reverse mortgage, the jumbo reverse mortgage loan limit is a moving target.  In general, the max loan amount considered is $4,000,000 at this point.  That said, there are a few investors that will be introducing new products that will allow loans as high as $6,000,000 – $8,000,000.  However, not everyone is eligible for that amount.  It just depends on your age.  It may vary for other programs as well.  For example, there is one program called the “Equity Edge” reverse mortgage.  The Jumbo reverse mortgage loan limit on this program is $3,000,000.00 (this is the one that can be done for 60+ year olds vs 62+ year olds).

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Jumbo Reverse Mortgage Qualifications

Keep in mind there are many guidelines, but here are some basic jumbo reverse mortgage qualifications:

  1. First and foremost, for the jumbo reverse mortgage qualifications, there is a minimum age requirement. You must be 60 or 62 years old or older (varies depending on the program).

    Jumbo Reverse Mortgage Qualifications
    Jumbo Reverse Mortgage Qualifications
  2. It seems like the most challenging of jumbo reverse mortgage qualifications is the equity requirement. You can borrow roughly 32% (62 year old) to 56% (87 year old +) of the value of your home. The older you are, the more you get (keep in mind the new Equity Edge program percentages are not released yet as of June 19, 2018).
  3. In terms of Jumbo reverse mortgage qualifications, there are no debt to income ratio requirements. There are just residual income requirements.   It’s much easier than a regular loan.
  4. There are some basic credit requirements, but if you’ve paid your housing and installments on time for the last two years, you should be good.
  5. You can only do a jumbo reverse mortgage on your primary residence.
  6. Not all properties are eligible. For now, just single family dwellings, condos, townhomes, PUD’s and duplexes are eligible (3-4 unit properties may soon be eligible).
  7. If you don’t pass the credit and residual income requirements, it doesn’t necessarily disqualify you. It just means you’d need a tax and insurance escrow account.

    Jumbo Reverse
    Jumbo Reverse

Jumbo Reverse Mortgage Benefits

Jumbo Reverse Mortgage fees can be less than the FHA version.  For example, the  FHA reverse loan can have an origination fee ranging from $2500 – $6000.  Also, there is a mortgage insurance premium that is 2% of the appraised value.  With the jumbo, there is no mortgage insurance premium and sometimes there is no origination fee (depending on how the loan is structured).

The Jumbo program will allow you to access more funds.  Some articles posted be non reverse mortgage professionals incorrectly state that the max loan amount for an FHA reverse loan is $679,650. This is something called the max claim amount, but it’s not the max loan amount.  It works differently than a regular loan and most journalists, bloggers, and even traditional loan officers don’t know how it works.  $679,650 is basically the max appraisal considered and depending on your age, you get about 40-75% of the max claim amount (assuming your house is worth that or more).  Hence, the max FHA reverse loan amount is about $$275,000 -$502,000.  The jumbo allows for actual loan amounts of $4M – $8M depending on the investor.

This program can be done on non – FHA approved condominium HOA’s.  In contrast, in order to do the FHA reverse mortgage on a condominium, the homeowner association needs to be approved by HUD.  It’s not the hardest thing ever, but often times HOA’s don’t want to bother with this.  Luckily, there are a couple of options for private reverse mortgages that allow you to do a reverse loan even is the HOA is not HUD approved.  However, most the the investors will lend 5% less than they would for the same person that lives in a house instead of a condo.

Jumbo Reverse Mortgage Drawbacks

The interest rates can be higher than that of the FHA reverse mortgage.

There are less lenders and brokers that are familiar with this program than the FHA version.

For homes valued at $1,500,000 or more, there is a second appraisal required.  On the plus side, the investor pays for this.  The drawback is that the loan will be based on the lower of the 2 appraisals.

Hopefully, this answer the question – What Is A Jumbo Reverse Mortgage?

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For more in depth info on all Reverse Mortgage subjects, check out

www.reversemortgagecalifornia.biz 

www.reversemortgageloanadvisors.com

Reverse Mortgage Frequently Asked Questions

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