A Jumbo Reverse Mortgage differs from a HECM in that it has lower closing costs, variable interest rates and sometimes offers less cash to borrowers.
Similarities
A Jumbo Reverse Mortgage loan works much like an HECM. The borrower is able to access the equity in his home and is not required to pay it back unless the home is not being used as a primary residence. With the jumbo reverse mortgage, no monthly loan payment is made and money can be used for any reason. Just as the HECM, the amount that is owed will never be more than the home’s value.
Jumbo reverse mortgage
For homeowners who have a higher valued home, FHA offers them the Jumbo Reverse Mortgage, also known as Propriety Reverse Mortgage. This loan enables these homeowners to access more than the amount their home has available in equity. This financing is offered to homeowners 62 years of age or older and for homes valued at or above $625,000.
Home Equity Conversion Mortgage (HECM)
This is the only reverse mortgage that is insured by the Federal Government of the United Stated and is only offered through a lender approved by the FHA. The HECM is the most popular among the reverse mortgages; almost 90% of all reverse mortgage in 2007. This is because it usually offers the most amount of money to those homeowners with an average-valued home.
Main differences
The major difference between a Jumbo Reverse Mortgage and an HECM is decided on by the home’s value. The interest rate charged is one other difference. The interest rate of a Jumbo Mortgage is sometimes higher than that of an HECM loan. However, the Jumbo Mortgage only charges interest on the total of the money that is used from the line of credit that is available.
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