Jumbo reverse mortgages are for homeowners with homes worth more than $800,000. The new Jumbo reverse is better than what was available in 2017 because it provides access to more wealth than the popular FHA reverse. The Jumbo can also be used to buy a house, without having a mortgage payment.* We’re often asked, “Which one is better, the Jumbo or the FHA version?” That’s a little like asking… “Which is better a hammer or a screw driver?” It depends on what you’re trying to accomplish. The Jumbo can do things the FHA version cannot, and vice versa. All reverse mortgages can do something nothing else can: allow access to wealth trapped in a home without selling or making a mortgage payment.* When a reverse mortgage is the right tool, then the question is: which type is best. Answering that depends on what’s important. The following list clarifies when one is a better fit than the other. Here are 10 pros of the new Jumbo compared to today’s FHA reverse.
- Advantage #1, get more cash on higher value homes.
- Advantage #2, the home’s value is not capped at the FHA lending limit of $679,650. On an FHA reverse, value over $679,650 is ignored.
- Advantage #3, no mortgage insurance premiums. Jumbos have no, 2% of house value, up-front mortgage insurance. Jumbos have no, 0.5% of loan balance, annual mortgage insurance.
- Advantage #4, no 60% disbursement limit in year one – all proceeds available at closing.
- Advantage #5, three different fixed-rate options: lower rates if need less money.
- Advantage #6, it’s not an adjustable loan – the rate never changes.
- Advantage #7, condos do not have to be FHA approved.
- Advantage #8, can pay off debts to qualify.
- Advantage #9, can pay off mortgages or liens seasoned under 12 months.
- Advantage #10, can retain up to 4 financed properties. Here are the cons, or drawbacks, when comparing a Jumbo to an FHA reverse.
FHA Streamline Refinances
An FHA streamline refinance allows you to refinance your current FHA loan without the need to income qualify, and in many instances, without the need for an appraisal. Though there are a lot less requirements on an FHA streamline refinance, there are still guidelines that need to be met. So let’s take a look at those. You must have made at least six payments on your current loan. Your loan cannot be delinquent or have any late payments in the previous six months. Your new combined rate, which is your interest rate plus your MIP factor, must be at least a half a point lower. Different rules do apply if loan as an arm or hybrid arms so contact your lender or me for additional details. Your new maximum loan amount can only include your current principal and interest balance minus any upfront MIP refund if available plus your new upfront MIP premium. closing costs and prepaid cannot be rolled into your loan so you might need to be prepared to pay for those out of pocket or negotiate with your lender for a lender credit via interest rate. Also, though FHA does not have a requirement for credit scores lenders do so check with your lender or me to make sure you need that guideline and there you have it a quick look at FHA streamline refinances.