over 55

 

 

 

 

 

Using a Reverse Mortgage to Buy a Home

We were recently educated on the fact that seniors can use a reverse mortgage to buy a new home. Suppose you wanted to use all cash to buy but were limited to a budget of $100K. The properties for $100K are practically nonexistent, and the homes you really like are closer to $200K. A reverse mortgage may be the answer.

Reverse mortgages are basically collateralized loans - you must have enough equity in the property as security for the lender.

For example, you would like to purchase a $250K home but will only net $125K after the sale of your current home. If you are at least 62 years old, you may qualify for a reverse mortgage loan. The older you are, the less equity required in the new home.

This is possible because in 2009, the Federal Housing Administration introduced a new product called the Home Equity Conversion Mortgage for Purchase, or HECM. We are discovering that not many people (including ourselves) know about this program.

Key Points to Consider:

  • The minimum age is 62 years old.
  • Borrowers must own the property outright or have a considerable amount of equity in it.
  • The home must be the borrower's primary residence.
  • The borrower must be able to pay the home's property taxes, insurance premiums, homeowner association dues and any other ongoing property costs.
  • The borrower must have no delinquent federal debt.

Eligible dwellings under HECM for Purchase:

  • Single-family homes.
  • Two- to four-unit homes with one unit occupied by the borrower.
  • Condominiums approved by the U.S. Department of Housing and Urban Development.

Disclaimer: We are not mortgage brokers so this is not our area of expertise. However, we know many mortgage specialists who can assist you in this area. Please call 760-730-9300 or reverse@over55homefinders.com for a contact.

 


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