Purchasing A Home Using A Reverse Mortgage
Over 10,000 people retire every day in the United States. Many times, these individuals are looking to right-size their homes for retirement. It may be one without stairs, a home more suitable for aging in place, or one closer to family and friends. The challenge is to find the right financing solution to purchase a home during retirement. The HECM lifestyle mortgage for purchase program was uniquely designed to help meet this challenge. Mortgage South has had a lot of experience over the years helping retirees find the solution they need to purchase a home that meets all of their needs. Since FHA approved the HECM for purchase program in 2010, it has become commonplace in the Nashville, TN and Chattanooga, TN real estate markets. This federally insured program allows the homeowner to utilize the proceeds from the sale of their current home to purchase a right-sized property that fits their lifestyle without breaking their nest egg.
Advantages of using a HECM lifestyle Mortgage to Purchase a Home
- There are no monthly mortgage payments required (borrowers are responsible for paying property taxes, insurance, HOA dues, and maintain the property).
- Preserves cash savings and investments rather than liquidating savings and investments to pay all cash for the home purchase
- It is a way to leverage funds to make it possible to purchase a higher valued home.
- Provides financing so one can right size to a lower maintenance home, a one-level home, a home more suitable for aging in place, move to be closer to children or even purchase one’s “dream home”.
Frequently Asked Questions & Answers About HECM For Purchase
What sources are allowed for the cash required to close?
- The sale of the departure home
- The sale of the borrower’s other assets
- The borrower’s personal savings
- Gift money from parties not involved in the transaction
What requirements must the new home meet?
- Must become the borrower’s primary residence
- Must be occupied by the borrower within 60 days from closing date
- Construction must be complete, the property habitable, and a certificate of occupancy must be issued where applicable.
What can’t be used for the cash required to close?
- Seller financing and concessions
- Funds withdrawn from credit cards
- A bridge loan of any kind
Which home is the HECM mortgage loan for?
- The HECM mortgage loan is placed on the new home. If the cash required to close comes from the sale of the departure home, that sale is a transaction separate from the HECM for Purchase transaction
What are property types eligible?
- Single family
- HUD-approved condos
- Planned unit developments (PUDs)
- Two to four unit properties (one unit to be occupied by borrower)
What are the borrower responsibilities?
Responsibilities include (but are not limited to)
- One of the borrowers continuing to live in the home
- Keeping current on tax and insurance payments on the property
- Maintaining the property according to FHA standards
Using the HECM mortgage to finance the purchase of your new home may be your solution to meeting your goals without having a monthly mortgage payment. Many local realtors and builders in our area have utilized this program in the past. Pratt Homes has used Mortgage South and have properties available in our area for purchase visit www.prattliving.com to view available homes and schedule a tour.