Over the past years, many celebrities including Fred Thompson, Alex Trebek, as well as Robert Wagner, have talked about reverse mortgages as an option to complement seniors who are on a fixed income by using the equity that has already accrued in the home. Yet, here is another and less known use of a reverse mortgage that you might not have heard about: purchasing a new home. In many cases, seniors are able to hold onto their current home as well. Having the proper information can help anyone in this particular situation.
New Way Introduced
In the year 2009, the FDA introduced a new way to purchase a home called Home Equity Conversion Mortgage for Purchase, also known as HECM for Purchase reverse mortgage. It allows Americans who are 62 years old or older and already own a home to purchase another one by utilizing a reverse mortgage with the home that they already own.
Here are some crucial key points to take into account before actually applying for an HECM for Purchase Reverse Mortgage.
Requirements for the borrower under the HECM for Purchase state very important criteria to keep in mind.
* The age requirement of the borrower is 62 years or older.
* The borrower with no lean must own the property or a very significant sum of equity.
* The borrower must live in the property as their primary place of residency.
Along with these requirements placed on the borrower for an HECM for Purchase reverse mortgage, there are also certain requirements placed on the property. These requirements within the HECM for Purchase reverse mortgage include meeting all of the FHA currently placed standards as well as flood requirements.
What to Remember
Keep in mind that with these requirements, and others, the HECM for Purchase reverse mortgage can cover a minimum of 47% to a maximum of 52% of the home’s purchase price. The borrower has to make up with the remaining of the purchase amount through things such as savings, retirement accounts, and gift money.
For more information about HECM for Purchase reverse mortgage, feel free to contact Longbridge Financial, LLC.