Blog content updated on 12/27/21
Longbridge has added a line of credit (LOC) feature to its affordable, Platinum proprietary reverse mortgage. The Platinum LOC loan allows qualified borrowers age 60 and older1 to access an open-ended line of credit that grows at 1.5% per year for up to 7 years, and features a 10-year draw period.
Platinum proprietary reverse mortgage:
More income tax-free cash2 than a HECM, and more flexibility than a HELOC.
Did you know that there’s a type of reverse mortgage specially designed for homeowners with high-value homes? If your home’s value is $400,000 or more, you may want to consider a jumbo reverse mortgage (also known as a proprietary reverse mortgage).
It’s a non-Federal Housing Administration (FHA) reverse mortgage that offers more cash than a standard Home Equity Conversion Mortgage (HECM)—depending on your home’s value, up to $4 million—with low costs.
How does Platinum jumbo reverse mortgage compare to a standard HECM?
Here’s what’s common to both:
- They allow homeowners ages 55 and older1 to convert a portion of their home equity into cash they can use for any purpose—with no monthly mortgage payments required3.
- Loan amounts increase over time, with payment due when the last borrower passes away or permanently leaves the home.
- As long as borrowers meet their responsibilities—paying property taxes, homeowners insurance, and home maintenance costs—they continue to own their home.
- Both loans involve financial counseling to ensure that it’s a good fit for the borrowers.
How much you can receive is based on how much home equity you have, your age, and current interest rates. In general, the more home equity you have and the older you are, the more you can receive.
But there are some differences—unlike a standard HECM, a jumbo reverse mortgage:
- Allows you to access more of your home’s equity—up to $4M income tax-free2
- Lets you receive 90% of the proceeds at closing and the remainder immediately after the loan closes
- Usually does not require mortgage insurance premiums
- Has interest rates that are typically higher than a standard HECM
In addition, a jumbo reverse mortgage is not insured by the Federal Housing Administration (FHA)—however, most lenders offer borrower protections similar to FHA guidelines. If you’re considering a jumbo reverse mortgage, ask your lender how its policies compare.
How does a Platinum reverse mortgage LOC compare to a traditional Home Equity Line of Credit (HELOC)?
Many senior homeowners choose a standard HELOC to access their home equity and improve their cash flow in retirement. Unfortunately, most never consider a jumbo reverse mortgage—which offers more flexibility as compared to a HELOC, and as a result may be an attractive alternative for many older adults.
In general, it offers more flexibility than a HELOC—with no monthly mortgage payments required.3 Plus, as compared to a HELOC, a Platinum LOC features:
- Low upfront costs
- Comparable rate
- Easier income qualification
And unlike a HELOC, Platinum offers a reusable line of credit that grows over time4, with similar borrower benefits and safeguards of a standard reverse mortgage.
How can you use a jumbo reverse mortgage LOC?
For many of today’s older adult homeowners, their largest retirement asset is their home. In fact, according to the National Reverse Mortgage Lenders Association, total home equity for America’s homeowners age 62 and older reached a record $9.57 trillion during the second quarter of 2021.5
How people can take advantage of this vast, untapped pool of wealth.
In retirement, investment assets can rise and fall in a volatile market—but older adults with high-value homes have the advantage of being able to access a significant amount of home equity. There are many reasons to consider drawing on home equity by using a jumbo reverse mortgage:
- Use the loan proceeds to avoid tapping into investment assets
- Make home improvements or modifications in order to “age in place”
- Pay off an existing mortgage or other large debts
- Help family members with their financial needs
- Help cover rising medical, long-term care, or in-home care costs
- Buy an investment property or a vacation home
You’ve invested a lot of time, effort, and money into your home—why shouldn’t you start getting more out of it when you need it most?
With a jumbo reverse mortgage line of credit, such as Longbridge Platinum, the proceeds are yours to use as you wish.
Which jumbo reverse mortgage should you get? There are a wide range of options available. Make sure to shop around and ask the lender what the costs and fees would be. Longbridge Platinum offers the widest range of eligible home values, attractive low rates, and a streamlined approval process.
Click here or call Longbridge Financial today to learn more about a Platinum jumbo reverse mortgage.
1 State exclusions apply.
2 Consult a financial advisor and appropriate government agencies for any effect on taxes or government benefits.
3 Real estate taxes, homeowners insurance, and property maintenance required.
4 Except for the first 25% taken at closing.