Home Buyers Guide

What is a Reverse Mortgage?

A reverse mortgage, or HECM (Home Equity Conversion Mortgage), is a way to turn the equity in your home into tax free cash without having to make any monthly mortgage payments. Instead of monthly payments, the loan is repaid in one lump sum when the last borrower leaves the home. As part of the loan, the borrower is required to continue paying property taxes and insurance and maintain the home, and to comply with all the terms of the loan. Already used by more than half a million households across the United States, a HECM reverse mortgage is a government insured loan that enables seniors to gain financial independence from their ever increasing living expenses.

How does that help me purchase a new home?

benefits

In 2006, the Federal Housing Administration (FHA) created the HECM For Purchase loan. This innovative loan was designed to help seniors purchase a new primary residence using a reverse mortgage—all within a single transaction.

How does it work?

Very simply, the HECM for Purchase replaces a traditional mortgage to finance the new home. A down payment is combined with the HECM For Purchase loan proceeds to purchase the home. The down payment is usually obtained from the sale of your current home or from other savings or assets.

How Much Could I Qualify For?

The loan amount is based on the age of the youngest borrower, prevailing interest rates, and the value of the home you wish to purchase.

How Do I Qualify?

Qualifications for a HECM For Purchase reverse mortgage are based on these important factors:

HECM Purchase

Reverse Mortgage For Purchase Benefits

  • NO monthly mortgage payments
  • Loan proceeds are TAX FREE (Always consult your financial advisor)
  • NO prepayment penalty
  • Practical credit requirements tailored to seniors – no credit score requirement
  • Increased discretionary cash
  • Can sell the home whenever you wish
  • Remain on title and continue to own the home (Property tax and insurance must continue to be paid and the home maintained.)

EXAMPLE ONE

SELL YOUR HOME

You sell your existing home for $500,000.

Pay off $200,000 mortgage = $300,000 cash.

Reverse Mortgage Benefits

PURCHASE NEW HOME

You find a NEW home for $350,000.

Use $200,000 as a down payment.

Use $150,000 from a HECM For Purchase to complete new home purchase.

Reverse Mortgage Benefits
Reverse Mortgage Benefits

EXAMPLE TWO

SELL YOUR HOME

You sell your existing home for $500,000.

Reverse Mortgage Benefits

PURCHASE NEW HOME

You find a NEW home for $350,000.

Use $200,000 as a down payment.

Use $150,000 from a HECM For Purchase to complete new home purchase.

Reverse Mortgage Benefits
Reverse Mortgage Benefits

EXAMPLE THREE

SAVINGS

You have $300,000 in savings ready to purchase a new home.

Reverse Mortgage Benefits

PURCHASE NEW HOME

You find a NEW home for $350,000.

Use $200,000 as a down payment.

Use $150,000 from a HECM For Purchase to complete new home purchase.

Reverse Mortgage Benefits
Reverse Mortgage Benefits

EXAMPLE FOUR

SAVINGS

You have $200,000 in savings ready to purchase a new home.

Reverse Mortgage Benefits

PURCHASE NEW HOME

You find a NEW home for $350,000.

Use $200,000 as a down payment.

Use $150,000 from a HECM For Purchase to complete new home purchase.

Reverse Mortgage Benefits
Reverse Mortgage Benefits

Call (855) 202-0846 or Schedule a Consultation. No Fees. No Obligation.

Home Buyers Guide

Schedule a Consultation
No Fees. No Obligation.

1-855-202-0846