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How to pay off a reverse mortgage early: Strategies and Considerations
A reverse mortgage is perfect for elderly homeowners who want home equity without making monthly payments. But...
Reverse mortgages come in three shapes and sizes: a traditional reverse mortgage, a reverse mortgage refinance, and a reverse mortgage for purchase. But there's a fourth option that you may have yet to hear of - jumbo reverse mortgages.
They're essentially a supersized version of typical reverse mortgages. Most importantly, its pros outweigh the cons: lower age limits, higher loan limits, no mortgage insurance, etc.
Criteria | Jumbo Reverse Mortgage | Traditional Reverse Mortgage |
Loan Amount | Up to $4 million or more, depending on the lender | Up to $1,089,300 (FHA limit for 2024) |
Property Types | Primarily high-value homes, often exceeding FHA limits | Single-family homes, HUD-approved condos, some multi-unit properties |
Age Requirement | Typically 55 years and older (varies by lender) | 62 years and older |
Loan Insurance | Not insured by the Federal Housing Administration (FHA) | Insured by the FHA |
Interest Rates | May have higher interest rates due to larger loan amounts | Lower interest rates |
Payout Options | Lump sum, line of credit, or monthly payments | Lump sum, line of credit, monthly payments, or a combination |
Fees and Closing Costs | Generally higher due to larger loan amounts and complexity | Usually lower, with limits set by the FHA |
Use of Proceeds | More flexible; often used for large financial needs | Often used for supplementing retirement income, home improvements, etc. |
Loan Repayment | Repayment occurs when the homeowner sells the home, moves out permanently, or passes away | Same as Jumbo Reverse Mortgage |
Market Availability | Limited availability; not offered by all lenders | Widely available through FHA-approved lenders |
Does this sound like the right kind of mortgage for your next property? Read on to learn more about its current rates.
A jumbo reverse mortgage is a bigger, better version of a reverse mortgage. It allows senior homeowners to borrow up to $4 million in equity.
Better known or proprietary reverse mortgages, these loans don't have the strict rules of a HECM. That leaves room for higher borrowing limits, hence the name "Jumbo."
Here are the current jumbo reverse mortgage limits and rates.
Fixed Rate |
Adjustable Rate |
Lending Limit |
9.375% (9.869% APR) |
11.645% (6.625 Margin) |
$4,000,000 |
9.740% (10.268% APR) |
11.770% (6.750 Margin) |
$4,000,000 |
9.990% (10.542% APR) |
11.895% (6.875 Margin) |
$4,000,000 |
With a fixed-rate jumbo reverse mortgage, your only payment option is a lump sum. Meanwhile, an adjustable-rate mortgage allows for a lump sum or line of credit. This type of mortgage also has a lifetime cap of 5% more than the starting interest rate.
We've estimated the APR based on an assumed $1,000,000 loan amount, including standard third-party closing costs.
Although jumbo reverse mortgage rates are much more affordable than traditional options, it doesn't mean you must stick with your first option. Here's how to do better research and find the best rates for your circumstances.
Gather a list of potential lenders and compare their interest rates – your first option will most likely not be the most affordable one. Mortgage rates can vary significantly among different lenders.
Beyond the interest rates, you'll also need to review the closing costs and other associated fees. This may include appraisal fees, origination fees, and serving fees. Do your research to ensure your lender is reasonable with the overall closing number.
Finally, take a closer look at the loan terms of each lender. Remember to review the interest rate type and repayment option to make sure the loan terms suit your financial goals and limits.
Calculating jumbo reverse mortgage rates is pretty complicated, but you can do so with the following steps.
We recommend using a jumbo reverse mortgage rate calculator for more accurate results.
Once you've picked a lender, you can still make efforts to keep your jumbo reverse mortgage rates in check. Here's what we recommend.
First, determine whether a fixed or adjustable rate jumbo reverse mortgage better suits your financial needs. In most cases, fixed-rate loans are much better since they're stable and predictable throughout the loan's life.
Adjustable-rate options may be more affordable initially, but they can add up over time. Luckily, there are limits to how much the rate can change – no more than 5% over the original rate for jumbo reverse mortgages.
If the current market conditions are too dynamic or you've found a better rate option, consider refinancing your jumbo reverse mortgage. Refinancing lets you replace your current mortgage loan with a new one with more favorable terms like lower interest rates or reduced fees.
Consult a professional financial advisor if your jumbo reverse mortgage rates affect your financial health. They'll show you the right course of action based on your current goals, budget, and loan terms.
Here are the main jumbo reverse mortgage requirements you need to fulfill to qualify.
Depending on the lender and your state, you must be at least 55 to 62 years old.
The property can be a townhouse, single-family home, condo, or multi-family residence with up to four units. The borrower needs to be living in one of these units. This property also needs to be their primary residence, where they live most of the year.
More importantly, the property must be in a good, livable condition.
You must be up to date on all your expenses and payments, including:
You should also be able to continue paying these fees once you've taken the loan.
Jumbo reverse mortgages cater to a relatively niche group: senior homeowners short on cash and no other way to secure it. Here are some benefits you can expect from a jumbo reverse mortgage.
All HECM borrowers must have mortgage insurance, which is far from affordable. But it does cover the risk if the loan can't be repaid in full. Jumbo reverse mortgages don't have this requirement.
Jumbo reverse mortgage loan limits are generous. In fact, you can borrow up to $4 million via line of credit or in a lump sum. This is four times higher than the annual limit for HECMs.
Borrowers must be at least 62 to apply for an HECM. Jumbo reverse mortgage caps the minimum age limit at 55.
Unlike an HECM loan, you don't need to get your home approved by the FHA to qualify for this mortgage type.
Just like any limits, jumbo reverse mortgages have their downsides, too. Here's what you need to know before you invest.
Jumbo reverse mortgages often have higher interest rates than HECMs since you'll be borrowing a much bigger amount. Plus, the loan is borrowed over a much longer time frame. The lender uses the interest rates as a safety net in case the property value plummets.
Since jumbo reverse mortgages aren't regulated, they're also vulnerable to scams. Don't accept every pitch you get, and if you've been scammed by a lender, make sure to contact the CFPB right away.
Jumbo reverse mortgages are a lot more flexible without government backing, but that also means they're not protected. The lenders aren't bound by FHA rules, so read the fine print of all their loan terms before you sign anything.
Jumbo reverse mortgages aren't as flexible when it comes to payment options. You'll need to accept the money in a lump sum or through a line of credit. You don't have the option to receive a monthly income like with an HECM.
A traditional reverse mortgage, or HECM, is available to senior homeowners who are over 62 years old. They must also have a good amount of equity in their home. These mortgages are insured by the FHA and regulated by HUD.
The FHA sets a new loan limit on traditional reverse mortgages every year – $1,149,825 as of 2024.
But with a jumbo reverse mortgage, there's no such thing. Borrowers can get these loans even at 55 years old, and these mortgages aren't backed by a government agency. The current maximum limit is $4 million.
A jumbo reverse mortgage is an excellent option for senior homeowners who feel restricted by a traditional reverse mortgage. You can borrow up to $4 million, tapping into your home equity and even using the funds as a monthly pension check.
Plus, this loan type has endless pros: no mortgage insurance, lower age limits, and the ability to receive all your funds in the first year. What more could one want?
But before you invest, remember to get in touch with a processing or loan officer team.
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