Jumbo Reverse Mortgage News:
Got this email from a great and reputable lender… See below. I find so many of my customers are curious about reverse mortgage, but are misinformed about what the program really is. I hope this article below helps shed some light on the program. If you’re further interested, I recommend a call with Rick to find out even more for your personal scenario. While I believe the reverse mortgage is a great tool for many, it may or may not be right for you personally but you owe it to yourself to investigate your options.
The Jumbo Reverse Mortgage program continues to evolve with more favorable terms and more lenders entering the arena. As an originator specializing in Reverse Mortgages, I represent several Reverse Mortgage lenders as a wholesale representative.
I’d like to point out some of the recent enhancements to the program.
- The requirement to take all of the cash proceeds at the time of closing has been eliminated.
This has been one of the biggest objections to those that want the benefits of a reverse mortgage but don’t want to start accruing interest on the entire loan amount if they don’t need all of the cash up front. Now, these borrowers can preserve more equity in their home by reducing the amount of future interest owed. Now, there are two options when not all of the proceeds are needed at the time of closing:
- Part of the eligible loan proceeds can be obtained over a 1 to 5-year period monthly instead of all at once.
- Part of the eligible proceeds can be retained in a Line of Credit and accessed over a 10-year period.
As mentioned, the advantage to either of these options is that you will not be accruing interest owed on the portion of the funds that you have not accessed.
- Reverse Mortgage as a Second Mortgage:
Some borrowers don’t want to give up their low-interest rate first mortgage. Now, the Reverse Mortgage can be taken as a Second Mortgage, allowing borrowers to retain their existing first mortgage. This program works best when the existing first mortgage has a low interest rate and the balance is small relative to the value of the home
Top 10 Reasons Homeowners Use a Jumbo Reverse Mortgage Program:
According to loan data from one of the major Jumbo Reverse Mortgage lenders, the Top 10 reasons that seniors chose would choose a jumbo reverse mortgage:
- Make Home Modifications
- Buy an investment property or a vacation home
- Help children purchase a property
- Provide children with an early inheritance
- Create college funds for grandchildren
- Establish a trust fund
- Cover in-home care costs
- More financial liquidity
- Maintain their current lifestyle
- Pay off other debts
Financing the purchase of a new home didn’t make the Top 10 list but it should. It’s a great way for seniors to acquire a new home to live in or as a second home. Even though it didn’t make the list, it does make the Top 10 with RTC Mortgage.
Other Jumbo Reverse Mortgage Statistics:
- Average Property Value: $1.7 million
- Average Loan Amount: $665,000
- Average Borrower Age: 77
- Average credit score: 729
“Jumbo reverse mortgage loans present an opportunity for older Americans to achieve greater financial comfort and expand their wealth,” said a top officer of the nation’s biggest Jumbo Reverse Mortgage originator. Jumbo products have emerged as an optimal option for affluent homeowners who have a desire to diversify their capital and invest in other aspects of life, such as family needs, home remodeling or secondary property purchases.”
Jumbo Reverse Mortgage Loans can range as high as $4 Million and now give borrowers multiple ways to access cash such as taking some of the eligible proceeds over a 5-year period; maintaining a Line of Credit that can be drawn as needed. There is even a Second-Mortgage Jumbo Reverse Option for Seniors that want to maintain their existing low-rate mortgage.
For smaller loan amounts, the FHA Home Equity Conversion Mortgage (HECM) is still a great program with the popular Line of Credit feature that grows in value over time.
As with all Reverse Mortgage programs, the Borrower retains ownership of the property, not the lender.
Thanks for your interest in the Reverse Mortgage program. I will keep you advised of program changes as they occur. In the meantime, please call or email with any questions.
Your Trusted Mortgage Advisor with over 40 Years of Experience
Residential | Commercial | Reverse Mortgages