A growing number of seniors are turning to reverse mortgages to help them live out their life in comfort and without financial concerns. A reverse mortgage allows the senior, who must be at least 62, to tap into the equity of his or her home and use that money for basic living expenses, home repairs or any other needs. When the senior passes away, moves out of the home or sells the house, the mortgage payment comes due.

A more traditional way to tap into the equity of a home is through a home equity line of credit. The disadvantage of a home equity line of credit is that payments begin on the credit line immediately, which can strain the already tight budget of someone living on a fixed income.

Despite their advantages, there are some reasons why a reverse mortgage may not work for everyone. A reverse mortgage has a dollar limit that, if exceeded, prevents it from being insured by the Federal Housing Administration. These types of loans, therefore, have higher fees attached to them.

In the past, jumbo reverse mortgages were widely available, but several factors led to a decrease in the availability of this type of funding. But recently, increased interest in jumbo reverse mortgages has encouraged more lenders to offer this option. If you are interested in a jumbo reverse mortgage, you may have to shop around to find a lender, but they are available.

Before deciding if a jumbo reverse mortgage is best for your financial situation, it is important to understand why they have become more difficult to find. Once you understand why they fell out of favor with lenders and borrowers, you can make a better personal decision.

Homes are Worth Less Money

Jumbo reverse mortgages were first developed as a product because the Federal Housing Administration had a cap on the amount of money they would lend for a reverse mortgage. In an up housing market, people were left owning homes that had much more equity than the amount the Federal Housing Administration would lend. In order to access the maximum amount of the money they could, borrowers turned to jumbo reverse mortgages.

The amount of money that the lender will give depends on a number of factors, including the value of the home, whether the home needs any repairs and whether there are existing liens on the home.

When the housing market sank, the number of homes that were appraised above the Federal Housing Administration cap declined, leading to a decrease in demand for jumbo reverse mortgages. Even people who had homes that fell in the level above that covered by Federal Housing Administration backed loans were concerned about investing in a lending program that was not backed by the federal government. This combination left much less demand for the product, and with less demand, there were fewer institutions willing to offer the product.

Many Investors Viewed Them as Risky

Jumbo reverse mortgages, which were not insured by the Federal Housing Administration, began to look risky to potential borrowers. For the average person who had not followed the financial market, the ailing banks and talk of worthless real estate loans colored their perception of all nontraditional lending.

Jumbo reverse mortgages were included in this category, and interest in them declined. Because reverse mortgages are directed at older Americans, the concern over risk was a problem for jumbo reverse mortgages. This demographic is typically conservative, and the thought of losing the home that they worked so hard for was too much for most to consider, even if the fears were unfounded.

i>Tight Financial Market Meant Less Demand for this Product on the Resell Market

The lender typically resells the mortgages at a profit. With the troubled state of the financial institutions, the market for these products is soft. With little demand from either borrowers or lenders, the jumbo reverse market naturally declined. Jumbo reverse mortgages became less profitable, and lenders struggling in the tight financial market directed their attention to products that offered more return on their time and effort.

As the financial situation picks up, there is a renewed interest in jumbo reverse mortgages. They are not as prevalent as they once were, but are again available. While the jumbo reverse mortgage was hurt due to the economic problems with banks, the market is slowly showing signs that it could be recovering.

Jumbo reverse mortgages are a safe way to access the maximum amount of equity from your home. If you have trouble finding a lender in your area that offers this product, contact the National Reverse Mortgage Lenders Association for help.