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about reverse mortgages

Reverse Mortgage Tips

Vera Gibbons spoke with Julie Chen about when is a good time for a reverse mortgage and what to look out for.

Top 10 reasons why borrowers pursue a jumbo reverse mortgage

“Consumer response to the jumbo product has exceeded all of our expectations,” said an AAG spokesperson. “There seems to be a real market for reverse mortgages with affluent seniors, especially those seeking to liquidate some of their real estate wealth.”

The lender said the average borrower for its jumbo loan is 77 years old, has a credit score of 729 and owns a home valued at $1.7 million. It pinpointed the average loan amount at $665,000.

AAG explained it surveyed 250 Advantage borrowers to revealed the main reasons why seniors pursue a jumbo reverse, shedding light on how originators can better market the product.

Inside Reverse Mortgage Alternatives: QuantmRE

“Many of these people don’t qualify for reverse mortgages. They’re in their late 50s, and they find themselves in a position where they’re close to retirement age, they have – if settled in Southern California – potentially hundreds of thousands of dollars of equity.”

How it works

Sullivan described for RMD the ways that QuantmRE’s formula works. “We take two-and-a-half times the percentage of the value of the property that you release as the percentage of the increase in value,” he said. As an example, if a potential customer has a million dollar home and releases 20 percent of its value, they release $200,000. If ten years go by and the value of the home increases to $1.1 million, then the sale of the home is the point at which QuantmRE will collect its return on investment.

“[After the sale], you pay us back from the sale proceeds the original $200,000, and we use our multiples. So, we take the 20 percent, which was the value of the home that you released, we multiply that by 2.5, so we would take 50 percent of the increase in value, which would be $50,000. That would be our return on investment,” Sullivan said.

What is the downside of reverse mortgages?

My in-laws are elderly (in their mid and late 80s) and own their home outright. The in home care expenses for my father in law are mounting and reverse mortgaging their home seems to be the answer.

This product has become ever more popular with the aging society. Because of this these loans are changing almost daily. The downside to this type of loan is your house is appreciating after you lock in the payment rate.

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