A jumbo reverse mortgage can give seniors under age 62 access to millions of dollars. While reverse mortgages have a lot in common with traditional mortgages, there are significant differences. Let’s take a look at what a jumbo reverse mortgage is and how it can benefit you.
A jumbo reverse mortgage allows you to borrow a higher loan limit than those provided by Federal Housing Administration’s (FHA’s) or Home Equity Conversion Mortgage (HECM). This program is solely offered by private lenders, not the government. As of 2021, the maximum claim amount for the HECM program is $822,375.
What Are The Requirements?
The standard requirements for this kind of mortgage are usually the same as basic reverse mortgage requirements:
- You must live in the home you’re financing for the majority of the year – primary residence
- You must be able to cover your current loan balance and any cash you wish to claim with your equity
- You must provide proof that is current with your property taxes and insurance
- Your home must be maintained
Whether you’re getting a jumbo reverse mortgage in California or New York, the requirements will most likely be the same.
What Are The Benefits?
A jumbo reverse mortgage can benefit you in many ways. Let’s take a look at some of the common benefits below:
- Larger line of credit or lump-sum payment – With this type of loan, you’re able to borrow up to 4 million dollars. Having more borrowing power gives you the ability to achieve other financial goals
- You don’t have to pay mortgage insurance – 2% of the loan balance is paid upfront to cover the FHA mortgage insurance because jumbo reverse mortgages aren’t insured by any government agencies
- You can qualify at a younger age – This type of reverse mortgage allows you to borrow when you turn 60, instead of 62. If you haven’t reached the general age requirement for a standard reverse mortgage and you’re not able to wait another two years to gain access to cash, a jumbo reverse mortgage would be a great option for you.
- Meet healthcare needs – As we get older, our health may take an unexpected turn. Healthcare can be incredibly expensive, especially if it becomes a long-term expense. A reverse mortgage can give you access to cash that you may need to take care of yourself in a facility or make your home more appropriate for your changing needs.
Should You Get One?
After ensuring you fully understand the terms, conditions, and the fine print before making a final decision, you absolutely should get one if you agree with everything. If you want to pay off current debt, need extra cash to enjoy your retirement, or want to remodel your home, it’s definitely worth considering getting a jumbo reverse mortgage.