Jumbo Reverse Mortgage

A jumbo reverse mortgage (often referred to as a proprietary reverse mortgage) is designed for seniors who want to unlock the equity in their home but find that the maximum amount that can be offered through either a HECM or Home Keeper program is smaller than they want. In theory, there is no maximum limit with this type of loan.

What is a jumbo reverse mortgage?

The FHA-insured HECM reverse mortgage and the Fannie Mae HomeKeeper reverse mortgage are guaranteed by the US government. So, should there be a shortfall between the loan taken out and the value of the home, the government will pay the difference to the lender. This guarantees that the borrower will always get the money they signed up for.

However, there is one big disadvantage with both programs and that is the amount that can be borrowed. With a HECM reverse mortgage, depending on the value of the equity in the home, location, interest rate and borrower's age, the maximum limit $200,160 to $362,790.

For homeowners of high-value homes, who want to borrow more, this has been a serious limitation of this type of financial tool. However, private companies and banks have released their own proprietary reverse mortgages that will allow someone to borrow much greater amounts against their home.

In most respects these jumbo reverse mortgages work exactly the same way as the HECM and Home Keeper programs. The amount that can be borrowed is based on equity value, current interest rates and the borrower(s) age.

How does a jumbo reverse mortgage differ from a HECM reverse mortgage?

Apart from the greater amount that can be borrowed from a proprietary program, they are not available in every state. Also, there are some differences in how payouts are made.

With the HECM and Fannie Mae Reverse Mortgage, the homeowner can opt to take their loan as:

Monthly income: Opting to receive monthly income from a reverse mortgage is similar to purchasing an annuity.
Lump sum payment: With a lump sum payment, you are opting for a lump sum of cash from your home. The money can be used for any purpose, but you are paying interest on the total lump sum.
Line of credit: A line of credit gives a borrower access to all of the cash available from their home in a line of credit. The advantage of a line of credit is that the borrower only pays interest on the money that they use, not the total amount of money available to them in the line of credit.

However, with a jumbo reverse mortgage the monthly income option is not available.The loan payment is either made as a lump sum or line of credit.

Jumbo reverse mortgage lenders

The following is a list of some of the biggest lenders.

Financial Freedom: was the first proprietary Jumbo Reverse Mortgage program. The Cash Account Advantage program is available from Financial Freedom as well as other lenders.
Wells Fargo: does not have its own program but is licensed to broker the Financial Freedom Cash Account Advantage product.
Generation Mortgage: offers a jumbo Reverse Mortgage product called, "Generation Plus."
Bank of America: offers The Independence Plan, originally created by Reverse Mortgage of America which is now owned and operated by Bank of America.
Countrywide: offers a product called Simple Equity.
BNY Mortgage/Everbank: two versions are currently on offer: the Prime Advantage Fixed Rate Reverse Mortgage and the Prime Advantage Adjustable Rate Mortgage.

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Jumbo Reverse Mortgage