Real Estate Agents Guide

Discover the Benefits of a Reverse Mortgage Purchase Loan!

Increase your income by utilizing a new and relatively unknown Federal Housing Administration (FHA) loan that has been created to help the growing senior market.

The top producers know more about their industry than others. They know how to discover and present the best options for their clients. They simply have a larger arsenal of tools to use for every possible situation.

A reverse mortgage can provide you with another tool to help you sell more homes – it’s called the HECM for Purchase and is designed specifically to help growing numbers of retirees purchase new homes. The HECM for Purchase allows seniors 62 and older to purchase a new primary residence and take out a reverse mortgage in a single transaction. By doing this, they save money, reduce costs, and finance a home they may otherwise be unable to afford.  These options may open up a whole new market and give you an advantage to close more deals on higher value properties.

WHAT IS A REVERSE MORTGAGE LOAN?

A reverse mortgage or HECM (Home Equity Conversion Mortgage) is an alternative mortgage option for borrowers age 62 or older. In 2006, the FHA created the HECM for Purchase product. This innovative program was designed to allow senior citizens to purchase a new primary residence and obtain a reverse mortgage all within a single transaction.

HOW DOES THAT BENEFIT MY CLIENTS?

Your clients can now purchase a new home for their unique situation—closer to family, single story, downsizing, less upkeep, warmer climate, less expensive, etc.—with the benefits of:

  • Not having to spend all of their liquid cash on the purchase
  • Being able to afford a higher valued home without exceeding their budget
  • Avoiding strict income and credit score requirements to qualify for a traditional mortgage
  • Not having to make monthly mortgage payments as long as they live in the home and comply with loan terms

HOW DOES THIS BENEFIT ME?

You now have the ability to:

  • Expand into a growing senior housing market (8,000 people are turning 62 every day in the United States).
  • Obtain more listings as you help seniors either downsize or upgrade accordingly.
Example One

SOME IMPORTANT FACTS

Eligible Borrowers

Eligible Borrowers The subject property must become the borrower’s principal residence and the borrower(s) must occupy the subject property within sixty (60) days of closing.

Each borrower and non-borrowing spouse must attend HECM for Purchase Counseling from a HUD approved counseling agency.

Monetary Investment (40%-45% of new residence sale price)

At closing, the borrower(s) must provide a monetary investment to satisfy the difference between the HECM principal limit and the sale price for the property, plus any HECM loan related fees that are not financed into the loan, minus the amount of the earnest deposit.

Eligible Property Types

Both existing and new units must meet HUD eligibility standards. The property may be:

  • An existing single family home
  • A condominium unit that meets HUD requirements
  • A manufactured home that meets HUD requirements
  • A single family residential unit (conditions apply)
  • A newly constructed residence

Principal Residence

Must be occupied by the borrower as a primary residence.

Married spouses or other co-borrowers may be living apart because one of them is temporarily or permanently in a health care facility; however at least one borrower must be living in the home within sixty (60) days of closing.

Borrower(s) can only have one FHA loan at a time, although some exceptions may apply. All existing FHA mortgages (including HECM mortgages) must be paid off prior to closing.

Income Qualifying

The borrower(s) must be able to maintain the costs associated with the new home financed with the HECM for Purchase. These costs may include taxes, insurance, and HOA dues as well as home maintenance costs including snow removal, dock fees, beach access fee or any fee required to be paid by the homeowner to maintain the property.

They must also satisfy the monetary investment (down payment, closing costs and earnest money) for the HECM for purchase transaction.

Real Estate Professionals

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