A Proprietary Reverse Mortgage, often referred to as a jumbo reverse mortgage, is a unique financial product offered by private lenders. Unlike Home Equity Conversion Mortgages (HECMs), which are government-insured and subject to federal regulations, proprietary reverse mortgages are not federally backed. Instead, they are designed for senior homeowners with high home values, offering access to larger loan amounts. Here’s what you need to know about these exclusive reverse mortgages:
Eligibility Requirements
Eligibility criteria for proprietary reverse mortgages may vary from lender to lender. However, some common requirements include:
- Age: You must typically be at least 62 years old.
- Home Value: Proprietary reverse mortgages are designed for homes with high appraised values.
- Equity: You must have a significant amount of equity in your home.
- Creditworthiness: Lenders may assess your creditworthiness during the application process.
Loan Amounts
One of the primary advantages of proprietary reverse mortgages is the ability to access more substantial loan amounts compared to HECMs. The specific loan limit depends on your home’s appraised value, with higher-value homes typically qualifying for larger loans.
Payment Options
Proprietary reverse mortgages often offer a range of payment options, allowing borrowers to choose what works best for their financial goals. These options may include:
- Lump Sum: Receive a single, upfront payment.
- Monthly Payments: Receive a fixed monthly payment for as long as you live in your home.
- Line of Credit: Access funds as needed, similar to a credit line.
- Combination: Combine different payment options to meet your specific financial needs.
Costs and Fees
While proprietary reverse mortgages offer flexibility and larger loan amounts, they may come with different fee structures and interest rates compared to HECMs. It’s essential to carefully review the terms and costs associated with these loans before proceeding.
Repayment
As with other types of reverse mortgages, repayment of a proprietary reverse mortgage is typically not required as long as you live in your home. The loan becomes due and payable when:
- You move out of the home.
- You sell the home.
- You pass away.
At that time, the loan balance, along with any accrued interest and fees, is repaid from the sale proceeds. Any remaining equity belongs to you or your heirs.
Is a Proprietary Reverse Mortgage Right for You?
Deciding whether a Proprietary Reverse Mortgage is the right choice for your needs depends on your specific financial situation and goals. These loans offer significant borrowing power and flexibility, making them a suitable option for some high-value homeowners.
At Senior Security Mortgage, we specialize in helping seniors explore the benefits and considerations of proprietary reverse mortgages. Our team can assist you in understanding eligibility requirements, evaluating loan terms, and making an informed decision. Contact us today to learn more about how this unique financial tool can work for you.