May 2016

Jumbo Reverse Loans

Believe it or not, there is another Reverse loan option that has entered the market for Reverse mortgages and it’s not the FHA HECM loan program.

It’s a Jumbo loan for those situations where the property is considered to be “high value” such as about $2,000,000+.

A few years ago, there was one that was offered briefly but ultimately the lender that provided it, withdrew it from the market in the wake of the recession and there were no other options for larger loans until last week.

This new loan is a Fixed rate without any FHA Mortgage Insurance Premium   ( A closing cost savings) and your standard closing costs.   No surprises and works just the same at the FHA Reverse loan.

It’s ideal for the homeowner who has a high value home and a small existing mortgage or none at all, because the FHA program caps a property value at $625,500.

The lending limit on the Jumbo product is a whopping $6,000,000.00 and caps a new loan at $3,000,000.00 and not only can it be used for refinancing a property, it also can be used to purchase a new home.

And of course there are no mortgage payments, qualifying ratios to deal with or FICO score.

  • The Title of the property stays in the Borrower’s name and or Trust
  • When the borrower passes away the property goes to the estate.
  • The Lender never takes over the ownership of a property
  • The heirs can either refinance the loan into a traditional mortgage and keep it or sell it and receiving any remaining equity.
  • In either event, the heirs will receive a mortgage interest tax deduction in the year the mortgage is satisfied.

Using a Reverse loan has grown into one, new method to manage and control one’s investments and savings, by using the money from it for any extraneous and unplanned expenses as many Financial Advisors are discovering and implementing for their clients.

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How Good Are Reverse Loans?

There is a lot of confusion about Reverse loans and whether or not they are safe to use.   But each day another expert in the financial community has begun to support their use for people who are concerned about out-living their retirement funds.

Seniors currently retain over 5 trillion dollars in equity and that certainly is a very large amount of money that can be tapped by a senior to use in the future if needed.

For most of them, their home is the biggest assist they have and the best resource for funds to cover their on going expenses, but also any medical and unexpected expenses as they occur.

See what my clients are saying!

Jane Bryant Quinn is a well known author and also a columnist specializing in personal financial topics.   And she feels that using a Reverse loan as part of a retirement plan could be a very good option for many people and it could relieve them of the burden and worry of running out of money they need each month to support themselves.

Here is what she had to say.

TIME: Personal Finance Expert Champions Reverse Mortgages
Posted By Alana Stramowski On May 12, 2016

“TIME recently featured a segment with renowned author and personal finance columnist, Jane Bryant Quinn, where she discusses how her perspective has changed on reverse mortgages and why it can be a good option, even if you aren’t running out of retirement income.

As many in the industry are aware, recent changes have put new rules in place for reverse mortgages—changes that Quinn admits really pushed her to give reverse mortgages another look.

Formerly, people would take their reverse mortgage in a lump sum, then would run out of money and wouldn’t be able to pay their insurance or taxes, she explains.

“Now congress changed the rules, basically they take the money out for you and they only give you a certain amount per month that they are sure will last for life,” Quinn says. “This change has very much reduced the risk for older people with very little money.”

For people on the younger side, she explains that it can be very helpful if you take a credit line instead of a lump sum if you qualify for a reverse mortgage. This way, people could make interest on it for each year they don’t use it.

“Then if you’re taking money out of your savings or investments and the market is down and you want to sell investments, you can take money to pay your expenses out of your home equity credit line,” she says.

Quinn talks more in-depth about how her views on reverse mortgages have changed in her latest book, How to Make Your Money Last: The Indispensable Retirement Guide.”

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