Purchase Reverse Mortgage
A purchase reverse mortgage can be used to buy a home. You will never have to make a monthly mortgage payment after acquiring your home if you use a reverse mortgage for purchase loan.
That’s right, if you are 62 or older you can use a purchase reverse mortgage to buy a new or different home. The loan is specifically called “HECM for Purchase.” It is insured by FHA and backed by HUD, along with a variety of other HECM loans that can be obtained through a National HUD approved reverse mortgage lender.
Many senior citizens find that they wish to downsize or move from the large family home to a home that is more accommodating to their lifestyle during retirement. To that end, FHA introduced the unique purchase reverse mortgage in late 2008. Since that time, many retirees have used a purchase reverse mortgage to buy a house without obligating themselves to monthly mortgage payments for as long as they live in the home.
Purchase Reverse Mortgage Cash Requirements
This loan requires a substantial down payment from you, the borrower, in combination with the loan proceeds from the HECM for purchase mortgage. The two sums combined make up the total purchase price for the home. In other words, the amount of your cash contribution and your age(s) will determine how much home you can afford to buy using a purchase reverse mortgage.
Here is an example of a real life borrower that recently took advantage of the HECM for Purchase reverse mortgage loan program.
Evelyn, a 62 year old single woman sold her previous home for $350,000. At the time of the sale she had a mortgage balance of $25,000. After the cost of selling her home and paying off the old mortgage, she netted $300,000.
She then found a property in a retirement community that she liked for $400,000. At the current interest rate of 5%, using a Fixed Rate HECM for purchase loan, Evelyn was eligible to borrow $225,000. Her cash contribution to the total purchase price was $175,000.
After making the required down payment toward the total price of $400,000., Evelyn still had $125,000.cash left over from the sale of her old home AND no monthly mortgage payments on her new home.
Evelyn now has peace of mind on two fronts; she has a nice size nest egg that’s liquid and that she can invest however she wishes, and she has no monthly mortgage payments for as long as she lives in her new home. How great is that?
As more retirees are awakening to the financial planning attributes of combining a reverse mortgage loan into their overall arsenal of tools for strategically planning a comfortable retirement life, the more popular the HECM loans are becoming. They are not only being embraced by senior borrowers themselves, but by financial planners, estate and trust attorneys and CPA’s.
Why not investigate for yourself whether a purchase reverse mortgage might be a wise strategy for your retirement plans. Request a no obligation analysis today and evaluate your reverse mortgage options.
