Do you own a home but struggle with your everyday expenses? Then acquiring a reverse mortgage will come to your aid. Traditional reverse mortgages may be of assistance to many people, but the government-mandated restrictions make it an uphill task for many, making it impossible to start. But don’t worry, put on a smile as we have jumbo reverse mortgages that come with fewer restrictions. Homeowners can now access home equity over $726,525. I know you are wondering how you can sign up for a jumbo reverse mortgage. It’s okay but not so fast! You need to first understand fully about the jumbo reverse mortgage. Read on to grasp an important insight.
Understanding A Jumbo Reverse Mortgage
You can never come to understand a jumbo reverse mortgage without first understanding the traditional reverse mortgages.
Traditional Reverse Mortgage (HECM)
Having been established, managed, and insured by the Department of Housing and Development (HUD) in the U.S., most people use it as their Home Equity Conversion Mortgage. Pronounced as “Heck-um”, people can access money every month or in a lump sum. You can also use HECM to acquire credit.
According to HUD, THE Federal Housing Administration (FHA) should issue a maximum of $726,525 for HECMs. Minus the expenses and fees, it means that, if your home is worth it, you get to receive such an amount when you exchange it for equity. However, valuable property owners may require over $1 million and would love to access all that money at once. In this case, even though backed up by the FHA, a traditional reverse mortgage will not provide the required funding. The only solution is to seek a jumbo reverse mortgage.
What Is A Jumbo Reverse Mortgage?
Jumbo reverse mortgages have a lot of similarities with the jumbo loans. But the following two paramount qualities get featured:
• The amount to be issued has no limit: Though specific considerations like the age of the borrower, the value of the house, and the location of the house, are looked at, the lender is free to write loans of any amount they wish.
• The FHA does not support nor issue the jumbo reverse mortgages: It is, therefore, structured and supported by the private sector. The government is not involved, meaning that the lenders don’t enjoy government protection in case of challenges. Lenders of jumbo reverse mortgages are therefore usually extra cautious while issuing them.
Why Should You Prefer A Jumbo Reverse Mortgage?
Your thoughts might be occupied, wondering why you should choose a jumbo reverse mortgage over a traditional reverse mortgage. It is a no-brainer; the primary reason is the availability of more money. You get able to pay for your day to day costs like basic needs and more considerable living expenses such as vacation homes and traveling. With a jumbo reverse mortgage, you get assured of:
• Long-term care
• Medical procedures
• Additional insurance
Though HECM does not direct you on how to spend your money, it is usually challenging to enjoy benefits enjoyed by someone who has taken a jumbo reverse mortgage due to money limitations. However, in their line of safety, the lenders of jumbo reverse mortgage get extra diligent where they request the borrower to get approved first.
What Do Jumbo Reverse Mortgage Lenders Check?
If you are thinking of taking a jumbo reverse mortgage, then get prepared to provide a lot of information to your lender. Because they don’t get insured by the FHA, lenders get keen on reducing risk. You will be asked to provide your financial situation of which they get to verify every point as follows:
Even though your retirement income gets fixed, they will need to prove your income to get your actual financial status.
The lender gets to verify all your valuable assets like property, machines, expensive jewelry, equipment, intangible items like investment holdings and bank account. In case you are unable to repay your mortgage, the lender will just have to take possession of your assets.
III. Credit Score
By verifying your credit score, the lender can know your general financial acumen and creditworthiness. Though specific credit requirements vary, most lenders look for a higher than average score.
Do Jumbo Reverse Mortgages Have A Downside?
The fact that they are unregulated, they come with varying costs. It is therefore critical that you get to understand first all the fees and expenses involved. Unlike the HECMs, the costs are higher, so get prepared to foot the additional cost. You also get to spend more time in the market looking for one that suits you, and they are many.