The Benefits of A Home With A Reverse Mortgage

Most readers are aware that a reverse mortgage on an existing home can provide a senior homeowner with equity-based income.  Now a new program from the Department of Housing and Urban Development (HUD) allows seniors age 62 and older to PURCHASE a home with a Reverse Mortgage, using loan proceeds from a Home Equity Conversion Mortgage (HECM, pronounced HECK-um).

The Purchase Reverse Mortgage program is designed to allow seniors to sell their existing home, purchase a new principal residence and obtain a reverse mortgage on their new residence in a single transaction, eliminating the need for multiple closings.

The down payment required is based on the buyer’s age and the appraised value (or purchase price – whichever is lowest) of the home.  The HECM provides the remainder of the Sale amount and THE BEST PART?  No monthly mortgage payments on the new property – EVER.

Acceptable down payment sources for the Reverse Mortgage Purchase Program include:

  • Proceeds from the sale of the current home 
  • Retirement Funds including 401k, Stocks, Bonds, etc 
  • Gift funds from Family Members 
  • Other Savings

 Through this program, seniors can:

  • Relocate to another geographical area to be closer to family members
  • Downsize to a more manageable property, perhaps using only a portion of the proceeds of the sale of the former home to do so.
  • Live in a home that meets their physical needs for handrails, ramps, etc.
  • Keep their existing home and purchase a second home as the primary residence

 Why should seniors consider buying a home with a Reverse Mortgage?

Senior buyers can be free of mortgage payments as long as they live in the home, pay taxes and insurance, and maintain the home in a reasonable fashion.  No other home purchase program exists that will allow homeowners this option.

The loan doesn’t become due and payable until the last remaining borrower dies  or no longer occupies the home as their permanent residence or the home is sold.   Heirs to the property are not personally liable for the loan and lenders allow up to a year for final action.  Heirs may refinance or sell in order to repay the reverse mortgage loan.           

The senior homeowner and/or the heirs will never owe more than the market value of the property when the loan comes due.  Reverse mortgages are backed by a federally-insured program, paid for by the homeowner.  This is another unique part of the reverse mortgage program.   

The Department of Housing and Urban Development requires a session with a trained individual who counsels the senior homeowner on facts associated with the process before any costs may be incurred.  Buyers will be well aware of all costs and obligations before entering the process.

A knowledgeable Realtor, working with local experts in reverse mortgage lending, can help buyers find the best housing values for each personal situation.  If you would like to work with a knowledgeable Realtor, call Andrea Chapman today.

Andrea Chapman
(850) 386-2001

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