We have developed exclusive partnerships with some of the largest jumbo HECM lenders in the country.
Jumbo Reverse Mortgages | HECM Jumbo Reverse Loans For Seniors
One major misconception seniors have is that the reverse mortgage program is only for those of lower income. This is not the truth and many homeowners with million dollar + homes understand the benefits of the program and take out an HECM reverse mortgage every year.
For the HECM reverse mortgage, the maximum appraised value is $625,000 for 2014, but we have some exclusive partnerships with private Jumbo reverse mortgage lenders who can lend on any appraised value home (well into the $5 Million + territory).
The majority of the jumbo reverse mortgages we do are those for seniors who don’t want to sell the home anytime soon, but want to tap into all of that built up equity that has just been sitting there not working for their retirement. Having millions of dollars in equity is not the best investment decision since it will not be accruing interest of providing you with additional income during retirement.
Seniors with a substantial equity position need to diversify that cash into income producing investment such as annuities. The actual reverse mortgage program is one of the best kept secrets in terms of them providing guaranteed growth and a high rate of return such as an annuity without out of pocket investment dollars coming into play.
Many seniors are now taking out a jumbo reverse mortgage in order to generate lifetime retirement income through the tenure option, while many others are looking at the credit line to create a safety net. More adventurous seniors or those with an existing mortgage balance can choose a lump sum option to pay off any debts and or to give greater access to the capital tied up in the home.
Retirees have used Reverse Mortgages to fund:
Paying off mortgages
Long Term Care
Anything and Everything there are no restrictions on the funds
Who is the Jumbo Reverse Loan For
- Borrowers must be 62 years of age
- Must own the home
- Must be primary residence
- Never have defaulted on government debt
- Have equity available
- Income & credit scores are required by some banks (we have lenders who don’t take this into consideration)
Jumbo Reverse Mortgages Characteristics
- home values exceed $625,000
- No Mortgage Insurance Premium
- No Servicing Fee Set Aside
- Origination Fee on Principle Lending Limit
- Loan Amounts to $3,000,000
- Minimum Age – 62
- No Income or Employment qualifications
- Refinance of Primary Residence Only
There is a HECM Saver option on your Jumbo Reverse Loan – the mortgage insurance premium is substantially less thus you will save upfront, but the amount you can receive is a smaller percentage compared to the HECM.
We have seen an increase of borrowers who own homes in certain states ( ex: FL, CA, NY ) these homes are well over a $1 million, some of the potential clients do not have a mortgage on the loan and are wondering if the reverse mortgage loan makes sense for them.
“Taking a jumbo reverse mortgage makes alot of sense in some circumstances – the main one being that you are not ready to sell the home – if this is the case you can extend ownership by taking out some equity to either keep up the lifestyle or to fuel investments that will yield more than the mortgage itself.”
Having a million dollars or even the $625000 limit set by HUD is a large chunk of money to be tied up in a property that is not working on returning a positive ROI. Whether you decide to spend that money on vacationing, buy a cheaper home, or investing it can all lead to a more satisfactory retirement.
This program provides a lot of protection too since some are HECM ( government insured), yes there are closing costs involved but with the new HECM saver’s the fees have been lowered significantly.
“Super Jumbo Reverse Loans Help Seniors Keep Homes While Tapping Into Equity For Large Income Or Lump Sums”
A super jumbo reverse loan is simply a larger than a conforming loan taken from the equity in the home and paid out to you without being taxed. There are many homeowners over the age of 62 who have multi-million dollar homes, but have no access to a the equity unless they sell the house.
Super jumbo reverse loans do not take into consideration your credit history/scores and or your current income level. This is really beneficial since most consumers who have a lot of equities in a multi-million dollar home have a difficult time getting home equity lines of credits due to age/income/credit scores.
We have seen a sharp increase in the number of interested borrowers for super jumbo loans reverse mortgages, and with few lenders/private institutions we have been the leaders in helping seniors take out equity with jumbo homes.
Due to the current economic conditions the secondary market for jumbo reverse mortgages have been dry, and hence many seniors with higher end home’s have not been able to borrow jumbo reverse loans. We have scoured the country for the top private lenders and private investors who have created jumbo reverse programs specifically designed for those with higher end homes.
Tips When Shopping For a Jumbo Reverse Mortgage
1.) Always compare jumbo to jumbo
Jumbo reverse mortgages are not all created equal, so do your part in comparing the loan terms, the interest rate, and the reputation of the broker/lender you are dealing with. Are you searching for the HECM ( government insured loan ) or don’t mind working with a private investor to fund your Jumbo reverse.
2.) Careful with personal information
Be protective of your personal information including, but not limited to your social security number, your savings account information, and any sensitive information that crooks can use to steal your credit. Lenders don’t need your social security numbers in order to get you a quote, unlike a forward jumbo mortgage.
3.) Time to close and closing fees
Working to close on a jumbo – you may be surprised by the costs and or time to close the loan – we work with private lenders who can close quickly and do not have tremendous fees as some banks charge. For the HECM reverse mortgage aim to work with a bank/lender that specializes in Jumbo as it can take them very long to close the loan, and the fess will be high ( MIP is 2% upfront ).
Very similar to a reverse mortgage loan the jumbo version is simply for borrowers whose homes are valued at more than the current limit of $617,000. Jumbo reverse mortgages allow you the borrower to receive more income on the basis of a higher valued home appraisal. We have seen jumbo reverse mortgage companies that will lend you up to 65% of the home’s value upfront.
Understanding jumbo reverse mortgages
If you have a significant amount of equity in a high-value luxury home, and you want to generate a larger amount of cash than what’s available on a traditional reverse mortgage, you may consider a jumbo reverse mortgage.
Jumbo reverse mortgages, often called proprietary reverse mortgages, are available to homeowners who may want to borrow more than what is allowed by standard Home Equity Conversion Mortgages (HECMs). HECM loans are currently capped at $625,500.
Jumbo reverse mortgages are offered by private lenders. They all but disappeared from the marketplace following the 2008 housing crisis, but have slowly returned as home values have recovered. This type of loan is generally less restrictive than HECMs.
First, jumbo reverse mortgages do not have a cap. You can borrow as much as a lender will offer, even if the property has a value in the millions of dollars. These loans are typically used by homeowners with property values that exceed the HECM cap, allowing them to borrow more money.
In fact, some lenders advertise reverse mortgage loan amounts more than $2 million, and it’s possible to find reverse mortgage lenders willing provide funds on properties valued at $6 million. However, some jumbo reverse mortgage lenders will limit the loan amount to 25 percent of the home’s equity, which means the borrower would need equity of $2.5 million to receive a loan amount that exceeds the HECM cap.
Another advantage of a jumbo reverse mortgage is that it does not restrict the amount borrowers can receive in the first year of the mortgage term. Borrowers can usually obtain all the loan proceeds up front, whereas HECMs limit how much money a borrower can receive up front, called the “initial principal limit.” This limit will be based on age, the interest rate, the value of the home and the borrower’s financial assessment. Typically, an HECM will limit the upfront amount to 60 percent of the overall loan amount.
Jumbo reverse mortgages are not federally insured, which means there is no mortgage insurance premium added to the cost of the loan. HECMs, on the other hand, are federally insured and have an insurance premium cost tacked on.
Jumbo reverse mortgages are also available to homeowners with properties that do not qualify for an HECM, such as certain condominiums.
Another difference between this type of reverse mortgage and an HECM is jumbo loans do not require counseling before obtaining the loan.
Some jumbo reverse mortgages offer an equity sharing provision, which allows the borrower to pay part of the loan balance by passing along a portion of the increased value of the property. In return, the lender will charge an interest rate below the prevailing market rate.
There are no restrictions on how borrowers can use the proceeds. Common uses for jumbo reverse mortgage funds include:
- Buying a second home, condo, or vacation home
- Supplementing retirement income
- Paying unexpected health care costs or long-term care
- Funding home improvement projects
Although they are less restrictive, jumbo reverse mortgages work in much the same way as standard reverse mortgages. You do not have to make monthly payments when you borrow against your home. Instead, the loan is repaid once you sell or move out of the property. You can still live in your home while taking out a jumbo reverse mortgage, but you must continue paying property taxes and insurance, and maintaining the property.
Funds from a reverse mortgage are typically non-taxable, and they do not impact a person’s Social Security or Medicare benefits.
For tax purposes, the interest that accrues on a reverse mortgage is not deductible until it is paid, which occurs when the full loan is repaid. The deduction you can take for interest paid on a reverse mortgage loan is also generally subject to the limit on home equity debt.