Jumbo Reverse Mortgage
Good Day Reverse offers an exciting new jumbo reverse mortgage program! If you are reading this now you may have already inquired about an FHA government insured HECM reverse mortgage only to be told that you do not qualify. Wait, your property is worth $1,500,000 and you have a current mortgage of just $400,000. How do you not qualify with over a million in equity? Your loan-to-value is less than 33%. On paper you should be the perfect candidate for a reverse mortgage, but yet you find yourself sitting on the sidelines wondering what just happened. If it feels like there is an elephant in the room it’s because there is and it is called the jumbo reverse mortgage.
The jumbo reverse mortgage is a proprietary reverse mortgage program, so we can work with homeowners in the exact situation I just presented. In this article I will highlight some of the benefits to the jumbo reverse mortgage program and detail which homeowners may be a great fit. Time to let the cat out of the bag…I mean elephant.
What is a Jumbo Reverse Mortgage?
A jumbo reverse mortgage is a proprietary program that is not part of the FHA insured reverse mortgage programs. The age requirement is 62 years of age and the property must be the homeowners primary residence. It was created to accommodate homeowners who have properties that are valued over $800,000 and homeowners who own condos with a value of over $500,000. Since the FHA reverse mortgage program has a lending limit of $679,650 all the additional value and equity from a home is not included in the available money of a reverse mortgage. Since the jumbo reverse mortgage is designed to go above and beyond the FHA lending limit this program is perfect for homeowners who find themselves in higher value areas.
The benefits of a jumbo reverse mortgage go well beyond breaking through the FHA ceiling of $679,650.
- No MIP (Monthly Insurance Premium)
- No IMIP (Initial Mortgage Insurance Premium)
- Jumbo Programs Are Only Fixed Rates
- More Available Cash
- Non-FHA Approved Condos Allowed
- Many Different Allowable Property Types
No MIP or IMIP on a Jumbo Reverse Mortgage?
The highest cost for a government insured reverse mortgage is usually the IMIP. The Initial Mortgage Insurance Premium is a cost of 2% of the appraised value, or the maximum lending limit of $679,650. This cost can run as high as $13,593 for government insured reverse mortgages, which accounts for a lot of savings since the jumbo reverse mortgage does not charge that premium. The jumbo reverse mortgage has no IMIP. Zero. Zip. Zilch.
And yes, there is also no MIP. The Monthly Insurance Premium which increases the total rate on the government insured reverse mortgage by .50% is not included on the jumbo reverse mortgage programs. Then what is added to the starting rate you ask? Absolutely nothing is added to the starting fixed rates.
Homeowners not only save money on the initial fees for a jumbo reverse mortgage, but they also save on the ongoing rate by not having to include an addition MIP, or PMI.
Fixed Rate Jumbo Reverse Mortgages
All of the jumbo reverse mortgage programs are fixed rates. There are no adjustable rate jumbo options. What is beneficial about the jumbo reverse mortgage is that there is no initial cash limit like on the government insured program.
On a government insured reverse mortgage program the initial cap limit for cash out is 60% of the available money, or principal limit. If the current mortgage to be paid off is already over the 60% threshold then a borrower is only allowed to receive 10% of the principal limit at closing. This does not really effect the bottom line for the adjustable programs, BUT it can really negatively effect the fixed rate programs. This leaves a lot of available money on the table for those homeowners who prefer a fixed rate, or cash out.
Jumbo reverse mortgage to the rescue! The jumbo has no initial cash out cap limit. Just by waiving this rule the homeowners can now draw cash out on the full amount that they qualify to receive. This is an easy fix for a complex problem that many homeowners applying for a government insured reverse mortgage face today. Get the most from you reverse mortgage by making it a jumbo!
More Available Cash With a Jumbo Reverse Mortgage?
You have probably figured out by now that the jumbo reverse mortgage can offer more cash to the homeowner since there is no lending limit ceiling set at $679,650. Once you are able to break through that ceiling there is nothing ahead until you hit the maximum value of $6,000,000. That is right, $6,000,000! Everything in between is equity that can be accessed through a jumbo reverse mortgage.
Non-FHA Approved Condos with a Jumbo Reverse Mortgage
If you own a condo you may, or may not, be aware that they can either be FHA approved or non-FHA approved. FHA approval requires that your HOA submit an application for the entire neighborhood for approval by passing certain standards. It is also very common for condo HOA’s to not apply for FHA approval even though they would qualify, because of other factors. This can create a very frustrating reality for anyone living in a condo who would like to obtain a reverse mortgage.
The solution is the jumbo reverse mortgage. If the condo appraised value is $500,000 or more than you are eligible for a jumbo reverse mortgage. We would just need to obtain a standard condo questionnaire from the HOA that is standard to any type of refinance. All the rates and programs available to homeowners of single family residences are also available for condos. However, condos are applicable to a “hair cut” on the available principal limit.
Allowable Property Types for a Jumbo Reverse Mortgage
Conforming property types such as single family residence, condominiums and duplexes are allowable for a jumbo reverse mortgage.
Some of the ineligible property types are listed below:
- Three or more units
- Agricultural zoned properties
- Acreage > 20 acres
- Bed and breakfast properties
- Boarding houses
- Condo hotel
- Cooperative units (Co-ops)
- Geodesic dome homes
- Hobby farms
- Income producing properties with acreage
- Log homes
- Manufactured homes
- Mixed use properties
- Modular homes
- Properties subject to oil and gas leases
- Title held in business name, unless the borrower documents his or her 100% ownership of the business, and title is transferred to the borrowers name before closing.
- Working farms, ranches and orchards
Final Thoughts on the Jumbo Reverse Mortgage
Jumbo reverse mortgages are a great option for homeowners looking to obtain a reverse mortgage with higher valued homes. Although we have gone in-depth about the jumbo in this article there are always more questions and scenarios pertaining to each homeowners situation. We encourage everyone interested to reach out to us here at Good Day Reverse, so we can give you all the information needed about you jumbo reverse mortgage. Jumbo reverse mortgages are also qualified using similar financial assessment guidelines as the government insured programs, so allowing us to speak with you about credit history and income can really help too. We are here to help!
Have a Good Day!