The Reverse Mortgage (HECM) for Purchase
In 2008, the Economic Stimulus Act brought an exciting change to the FHA reverse mortgage program. This change allows the reverse mortgage to be used to purchase a new home.
The reverse mortgage for purchase program allows seniors age 62 and older to purchase a new primary residence using the reverse mortgage for financing. The reverse mortgage purchase loan is insured by FHA, and is virtually identical to the standard reverse mortgage transaction.
The process is simple. Either use saved cash, or the cash proceeds from the sale of your existing home as the down payment, while using the reverse mortgage financing to cover the remainder of the purchase price. This is a powerful tool many seniors today are using to move to a warmer climate, downsize, or move closer to their family and grandchildren. Once the transaction is closed, our clients have 60 days to move into their new home, with no required monthly mortgage payments*.
What are some of the basic requirements?
- Buyers must be at least 62 years of age.
- Home must be the buyer's primary residence.
- The home must meet all FHA property standards and be an eligible property type (single family home, 2 - 4 unit property with one owner occupied unit, HUD approved condominium project or a manufactured home that meets FHA guidelines.
- Must meet the income, credit and financial requirements associated with the FHA reverse mortgage program.
What are some of the benefits?
- Purchase a new primary residence with no required monthly mortgage payments*
- FHA insured mortgage program, just like the traditional reverse mortgage.
- The buyer takes title to their new home, not the bank.
- It is a non-recourse loan. You nor your estate, are not required to pay back any portion of the loan balance that exceeds the fair market value of the house.
- Move in up to 60 days after closing.