Forbes: Jumbo Reverse Mortgage a Viable Alternative Financing Option

For Americans who find themselves in unique financial situations requiring forms of financing that may serve as alternatives to more traditional, forward mortgage loans, numerous financial products exist that can potentially serve customers in such situations more efficiently than traditional financing. One of these alternative methods is a jumbo reverse mortgage, according to Melissa Cohn, EVP at Family First Funding LLC Private Client Group in a new piece at Forbes.

“Homeowners can now obtain a reverse mortgage in New York and other states up to $4 million,” Cohn writes as a member of Forbes’ real estate council. “Until recently, we were limited to loan limits of approximately $700,000. The increase in reverse loan limits is a huge benefit to senior homeowners who live in high-value homes.”

Particularly for seniors who live in homes with values beyond the lending limit currently applied to more traditional Home Equity Conversion Mortgage (HECM) loans, proprietary reverse mortgage options can provide a new way for those seniors to tap into their home’s equity, Cohn says.

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“With increased loan limits, senior homeowners can potentially access hundreds of thousands of dollars more than previously allowed,” she says. “Now, borrowers have the ability to tap into their home’s equity and put it to work any way they want, giving them more control over their assets, investments and cash flow. Proceeds are tax-free and no monthly mortgage payments are required.”

Also advantageous is the ways in which a loan’s proceeds can be used, further solidifying that seniors in more particular financial situations can access additional financing for a number of tasks and/or obligations they may be faced with, she says.

“Funds can be used for any purpose, such as buying a second home or condo, paying for medical or in-home care expenses, paying for home improvements or limiting the need to take excessive distributions from their investment portfolio,” she says. “No mortgage insurance is required.”

Other options for alternative financing cited by Cohn include banks allowing a purchaser of a primary residence to borrow up to 100% of the purchase price of a home at a maximum amount of $1,750,000; a product in which the lending institution will allow a borrower to present a year-to-date or year-end profit and loss statement as income verification; and a product that allows the bank to determine loan eligibility based on a percentage of the gross amount of deposits into a borrower’s business or personal bank account.

Read the story at Forbes.

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  • “…alternative financing cited by Cohn include banks allowing a purchaser of a primary residence to borrow up to 100% of the purchase price of a home at a maximum amount of $1,750,000….” What she does NOT say is whether or not the product is a new type of proprietary reverse mortgage or a forward mortgage where payments including taxes and insurance will be required to be made to the lender/servicer. She also does not provide the interest rate or the monthly principal payments. Worse she does not state what the tem of the loan is.

    Cohn seems convinced that proceeds higher than $700,000 (why $700,000 is yet another mystery) is such a big deal. When in the last 14 plus years has the industry not had a “jumbo/proprietary reverse mortgage” offering more than $700,000? It seems the reason why she uses a $700,000 standard is that she misunderstands the term “lending limit” in HECM land. She seem to confusing it with the HECM principal limit.

    It is hard to believe that Ms. Cohn has an extensive background in reverse mortgages.

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