Jumbo Reverse Mortgages in
Beverly Hills, California
Have you ever considered a reverse mortgage, but have too much equity in your home to benefit from one? Well, if you’re over the age of 62 and living in Beverly Hills, you just might be able to get one kind of jumbo-sized home loan: a jumbo reverse mortgage. Even if you’re familiar with a traditional reverse mortgage from AARP or other sources, you may not know how a jumbo reverse mortgage works. Read on to learn more about jumbo reverse mortgages to see if one could be a good financial fit for you.
Not FHA Insured
The Federal Housing Administration (FHA) insures all standard reverse mortgages (HECMs). Because this is the case, most reverse mortgages are subject to certain federal regulations and restrictions. One of those federal rules is the required payment of a mortgage insurance premium (MIP). For a traditional reverse mortgage, the FHA requires an upfront MIP at closing, as well as an annual MIP for the duration of the loan.
A jumbo reverse mortgage is not insured by the FHA, like a traditional reverse mortgage. Since the FHA does not ensure these loans, the MIP rules do not apply, which means the borrower is not required to pay those premiums. Both the HECM (FHA) and the Jumbo loans are Non-Recourse loans. This means that you will never have to repay more than the value of your home. So, whereas the FHA loan charges an insurance premium to protect the borrower, the Jumbo offers the same protections with no insurance charge to the borrower. Currently, the FHA charges 2% of the lower of the lending limit or the home value for the upfront MIP. This could be as much as $679,650 x 2% = $13,593.00. The Jumbo charge for this is zero.
Higher Lending Limit
For standard reverse mortgages, the FHA puts a lending limit of $679,650 in place. If you wanted or needed to borrow more than that, you’d be out of luck. Without a jumbo reverse mortgage, that is. Borrowers getting a jumbo reverse mortgage can often borrow between $600,000 to $6 million, depending on the value of their home.
There are caveats to borrowing amounts on a jumbo reverse mortgage. If your home value is $1.0M or greater, that is when considering a Jumbo may be a better product for you to consider. If your home is less than $1.0M, a standard reverse mortgage is probably better for you. In fact, jumbo reverse mortgages are usually ideal for owners of homes worth a considerable amount more than the federal lending limit. This is true for single-family residences, and multifamily (1-4).
Alternative Lending Option
A jumbo reverse mortgage is proprietary to the reverse mortgage companies that offer them and is designed to be a fixed-rate alternative to a HECM. This means that if, for whatever reason, your home doesn’t qualify for a loan insured by the FHA, or you have a condo worth $500,000 or more, your lender may be able to qualify you for a proprietary jumbo reverse mortgage.
Again, consider the caveat that a jumbo loan may not be the best option for you, even if your home value is high enough. Consider also that the payout options are different than with a HECM reverse mortgage, where you can receive your money as a monthly payment, lump sum, line of credit, or any combination of these three. With a jumbo reverse mortgage, your only option is a lump sum, or a partial lump sum with fixed monthly payments over a max of 5 years.
To make sure a jumbo reverse mortgage is right for you, try using a reverse mortgage calculator to estimate rates, costs, fees, and other factors. Once you’re ready for a jumbo reverse mortgage in Beverly Hills, apply today and get started on your loan.