Reverse Mortgage in
A reverse mortgage is a perfect option for those looking to raise some extra spending money even after retirement. But choosing which type is right for your situation can be difficult if you aren’t familiar with the different types of reverse mortgages available to you. Learn about your mortgage options in Corona, California and apply for your reverse mortgage today!
HECM or Jumbo Reverse Mortgage? Which is right for your Corona home
There are many different options when it comes to reverse mortgage loans in Corona, California. Understanding them all and picking the right one for you should not be a difficult task. Take a look at the difference between a jumbo reverse mortgage and a home equity conversion mortgage (HECM) in Corona and decide which type of mortgage works best for you and your situation.
Understanding the difference between a Jumbo and HECM Reverse Mortgage
A jumbo reverse mortgage and a HECM reverse mortgage have many similarities. They both follow FHA guidelines for a qualifying property and to a large extent, the income and payment history financial assessment guidelines. Only with a HECM can you purchase a home. Jumbos cannot be used to purchase a home. The Jumbos can be used to refinance just like the HECM. Typically a reverse mortgage for purchase is used to sell an existing home and move into a smaller or lower priced home. But sometimes the HECM for purchase is used to trade up in home value. If the new home is more expensive the reverse mortgage can help finance it without the need for a monthly mortgage payment. (You will still be responsible for the property taxes, hazard insurance and HOA) If it’s less expensive the reverse mortgage can keep some proceeds from the sale liquid instead of tying them up in the new home.
There are a few distinct differences that will push you to one side or the other. Reverse mortgages both have upfront fees. Jumbo and HECM reverse mortgage closing costs are similar, but there is no mortgage insurance with the Jumbo. This can be a significant cost which could be as high as $679,650 x 2% = $13,593.
Jumbo reverse mortgages allow you to borrow more money than a HECM mortgage. A HECM reverse mortgage lending limit is $679,650, which means that if your home is valued above that amount, that excess value would not be considered. If you have a home that is worth more than that amount and you want to borrow more than that, you should consider a Jumbo reverse mortgage. The Jumbo lending limit is $4,000,000 and home value considered will max out close to $8,000,000.
However, a jumbo reverse mortgage does not work as well for single-family residence under $1,200,000. This is because of how age factors into loan amounts and interest rate. The interest rates are better with the HECM’s, so those are always the first choice to recommend. But at $1.2M and above, the amount that can be loaned with Jumbos start to exceed the amount available via the HECM. Jumbos work better if the home is above $1,200,000 million and the owners are at least in their 70s. Jumbos for condos compete against HECMs starting at $500,000 and higher if the condo is Non-Conforming and does not qualify for a HECM.
A HECM reverse mortgage is insured by the Federal Housing Administration (FHA) which is part of the HUD. A HECM is not a government loan or done through a government agency. FHA insures the loan and set up the guidelines to be followed, but independent lenders are the ones that actually make the loan. The Jumbo reverse mortgages are privately guaranteed by the lender because they are non-recourse loans. Because of this, jumbo reverse mortgages are just as safe as a HECM.
With a reverse mortgage, you can enjoy your retirement without having to give up your income. Learn more about the different types of reverse mortgage options available in Corona, California and apply for yours today!