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How to Get a Reverse Mortgage Before Age 62

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The minimum age of a borrower for the most common reverse mortgage, called a Home Equity Conversion Mortgage or HECM, is 62 years old.  However, I’ve recently learned that this is not the only option for reverse mortgages, and with another option called a jumbo reverse mortgage, borrowers can be as young as 55 years old.  

For those who are new to this blog, I want to take some time to introduce myself.  I’m Bob, and I’m a happily retired senior who has been considering a reverse mortgage.  I started this blog to share what I’ve learned because there sure is a lot of information out there.  I’m hoping you can benefit from this, even if we don’t make the same decision about a reverse mortgage.  Today, I’m sharing some details about a jumbo reverse mortgage.

We’ve already established that borrowers can be as young as 55 years old to qualify for a reverse mortgage.  In addition, a jumbo reverse mortgage is not backed by the FHA, so this option does not follow the FHA loan limit of $822,375 (as of 2021).  With a jumbo reverse mortgage, the loan limit is $5,000,000.  This can be very appealing to those with high home values since they’d be able to borrow more money. 

Let’s consider one example.  If my home was worth $10,000,000, and I had considerable equity in the home, with a HECM, the most I could borrow is $822,375.  A jumbo reverse mortgage would let me borrow much more.  It doesn’t necessarily mean I would seek a loan amount of $5,000,000, but the option is there.

Jumbo reverse mortgages also can apply to condos that a HECM might not cover.  There are a lot of stipulations when it comes to condos with Home Equity Conversion Mortgages, which can make them limiting to those who live in condominiums.  A jumbo reverse mortgage may be the only option if you live in a condominium and the entire building is not FHA approved.

Jumbo reverse mortgages can have lower up front costs.  This is because a mortgage insurance premium is an initial cost with a HECM of 2%.   Since a jumbo reverse mortgage operates outside the scope of the FHA, this cost is not part of closing.  

Finally, jumbo reverse mortgages typically have higher interest rates.  Since these are not backed by the FHA, and don’t have the associated insurance to protect lenders, these loans carry more risk for the lender.  This is obviously a really important factor in your decision if you decide to go with a jumbo reverse mortgage.  The trade off is that you can potentially borrow more money and qualify at a younger age.

While there are a few key differences between the Home Equity Conversion Mortgage and the jumbo reveres mortgage, they both share a lot of similarities.  With either option:

  • House must be the primary residence
  • Homeowner must maintain the property
  • Homeowner is responsible for paying property taxes and homeowners insurance
  • Non-recourse loan 

In closing, whether you choose a Home Equity Conversion Mortgage or a jumbo reverse mortgage, it’s important to remember that both are loans.  You’ll be leveraging the equity in your home with either choice, and you’ll be able to receive payments from the bank.  To learn more about this, please read my blog post here.  Thanks for reading, and I hope you’ve been able to learn something helpful!

 

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