You may have heard about reverse mortgages, but did you know they can be used to purchase a new home?
If you've ever considered purchasing a new home - perhaps even a new construction in an active adult community, a one story home near your kids, or making the move to a warmer climate - then you must read this.
If you've ever considered purchasing a new home - perhaps even a new construction in an active adult community, a one story home near your kids, or making the move to a warmer climate - then you must read this.
Here's What You Need to Know
If you are age 62 or older, the Home Equity Conversion Mortgage (HECM) for Purchase, insured by the Federal Housing Administration, enables you to buy a new primary residence while taking out a reverse mortgage on that home in one transaction.
The program is a great alternative to liquidating assets or applying for traditional mortgages that will have to be paid back each month. The general rule of thumb is that the HECM for Purchase loan can help you finance up to 50% of the home's value - but you should speak to a loan specialist for details.
The amount of money you can use towards your new home depends on several factors, including the borrowers' age, the home's value, and the current interest rates.
As with all homeowners, reverse mortgage borrowers are still required to remain current on their property taxes and homeowners insurance.
The program is a great alternative to liquidating assets or applying for traditional mortgages that will have to be paid back each month. The general rule of thumb is that the HECM for Purchase loan can help you finance up to 50% of the home's value - but you should speak to a loan specialist for details.
The amount of money you can use towards your new home depends on several factors, including the borrowers' age, the home's value, and the current interest rates.
As with all homeowners, reverse mortgage borrowers are still required to remain current on their property taxes and homeowners insurance.
Common Uses of HECM for Purchase
There are a couple of common reasons why older adults may choose to use the HECM for Purchase program. If you are in or near retirement, for example, you may want to relocate to a warmer climate, or move closer to your family.
Others decide they want to buy or build a a home designed specifically for aging-in-place, whether that means downsizing to a smaller house or building a single-level home equipped with wider doorways, ramps, or handrails.
Additionally, now could be the perfect time for you to make the move into a lifestyle community of your choice, and there are many that give you the option of building a home that's tailored to your specific wants and needs.
No matter what you're looking to accomplish, a HECM for Purchase can help you cover the costs of building or buying your dream home.
Others decide they want to buy or build a a home designed specifically for aging-in-place, whether that means downsizing to a smaller house or building a single-level home equipped with wider doorways, ramps, or handrails.
Additionally, now could be the perfect time for you to make the move into a lifestyle community of your choice, and there are many that give you the option of building a home that's tailored to your specific wants and needs.
No matter what you're looking to accomplish, a HECM for Purchase can help you cover the costs of building or buying your dream home.
Using a reverse mortgage to buy a new home allows you to skip the need for a "forward' mortgage. Unlike a traditional mortgage, the HECM program does not have credit- or income-qualifications for prospective borrowers, which can often restrict older adults from eligibility.
Reverse mortgages don't require monthly mortgage payments. As long as the terms of the loan are met, the loan does not have to be repaid until the last surviving borrower no longer lives in the home as their primary residence. This can be a boon to people who don't have room in their budgets for monthly mortgage payments. Of course, as the homeowner you remain responsible for paying property taxes and homeowners insurance.
Reverse mortgages don't require monthly mortgage payments. As long as the terms of the loan are met, the loan does not have to be repaid until the last surviving borrower no longer lives in the home as their primary residence. This can be a boon to people who don't have room in their budgets for monthly mortgage payments. Of course, as the homeowner you remain responsible for paying property taxes and homeowners insurance.
