What Is The Home Equity Conversion Mortgage (HECM) For Purchase?
• An FHA-insured reverse mortgage
• Enables senior homebuyers, age 62 or older, to purchase a new primary residence and obtain a reverse mortgage in simultaneous transactions with no monthly mortgage payments
• Allows buyers to combine reverse mortgage proceeds with a down payment from their current home sale or other assets, to purchase a new home
How Can It Help Senior Homebuyers?
• Purchase a new home without taking on a new monthly mortgage payment
• Purchase a primary residence suitable for their current needs
• Purchase a home in a senior housing community
• Move into a new home that's easily accessible with modern amenities
• Downsize to a smaller, easier-to-maintain home
• Relocate closer to friends and family members
Example of How HECM for Purchase can work for you:
• Gloria and Ted Palmer, both 74, want to buy a more accommodating single-story home. They work with real estate agent Jane Mills to sell their current two story home. In a separate transaction, they look into buying a new single-story home in a housing development being built by Bill Davis.
• The Palmers meet with Mills and Davis and look at several homes priced at $300,000.
• Mills introduces the Palmers to John Reynolds, a reverse mortgage consultant. Reynolds shows the Palmers how the reverse mortgage for purchase could provide the additional funds they'll need:
Purchase Price $300,000
Reverse Mortgage Proceeds $198,080
Cash Required To Close $101,920
• The Palmers combine the $101,920 from the sale of their departure home with the $198,080 reverse mortgage to purchase a new home for $300,000- and have no monthly mortgage payments!
Comparison of Available Downpayment Assistance Programs
Total Household Income
By Family Size
Amount of Assistance and Use of Funds
Minimum Investment
Required from Buyer
Interest Rate &
Term
Monthly Payment Required
Forgiven
Aurora HOAP
1- $42,550
2- $48,650
3- $54,700
4- $60,800
City of Aurora only
Up to $10,000 for closing costs and/or down payment
1% of the
purchase price (Buyer can't get cash back at closing)
30 yr. term at 3% first five years only
No
No
Funding Partners- H2O
1 - $42,560
2 - $48,640
3 - $54,720
4 - $60,800
Metro- except Boulder
Up to 5% of the purchase price for closing costs and/or down payment
$1,000.00 (Buyer can't get cash back at closing)
15 yr. term no interest- shared equity program unless pd. in first 2 years
No
No
CHFA-
Home Opener
1 - $76,000
2 - $87,400
3+ - $98,800
Metro-except Boulder
Up to 3% for down payment or closing costs
$1,000.00 (Buyer can't get cash back at closing)
Changes Daily- 30 yr.
Yes
No
Colorado Housing
Enterprises
1- $60,360
2- $68,880
3- $77,520
4- $88,160
Metro-except Boulder
Loan amounts range from $3,000-$10,000 for down payment and/or closing costs
$500
5-7 yr. term currently at 6.5%
Yes
No
Contact me today for qualification and eligibility! Please note- there are more down payment assistance programs available, but I only have room for so much. :)
A federal agency within the Department of Housing and Urban Development (HUD) that provides mortgage insurance for residential mortgages and sets standards for construction and underwriting. The FHA does not lend money, nor does it plan or construct housing.
Customer Benefits:
3.5% down payment
No income restrictions
Non-traditional credit profile
No pre-payment penalty
Only need a 600 credit score
; can use non-profit down payment assistance programs or gift funds
Funding Fee:
Up front mortgage insurance premium (UFMIP): 1.75
Annual MI: .55% for 30 yr
Loan Limits:
$406,250 for Denver- Aurora area (this is the temporary loan limit)
• Benefit for Military Personnel (active duty, veterans, reservists, surviving spouses). VA will guarantee up to 25% of the mortgage.
Customer benefits:
• Eligible for 100% financing under most circumstances. There will not be a 5% reduction in the loan to value on VA loans.
• No monthly mortgage insurance
• No Pre-Payment Penalty
• Only need a 600 score
• Seller can pay closing costs
o No limit on "non-recurring" closing costs (appraisal, credit, etc) or discount points with 4% limit on funding fee, prepaids or buydown funds.
Funding Fee:
• Similar to FHA Up Front Mortgage Insurance
• Amount of Funding fee is based on service type, prior use, and transaction type. If borrower is a disabled veteran (VA must certify), then funding fee is waived
• Funding fee may be financed or paid in cash
Entitlement:
• Entitlement is the dollar amount of the guaranty available to the veteran
• Veteran with full entitlement can often purchase a home with zero down payment
• Certificate of Eligibility will document available entitlement
• Full Refinance (Rate/Term, Cash Out) or IRRL (Interest Rate Reduction Loan) - VA "Streamline" Refinance
Eligible borrowers:
• U.S. Citizens, Permanent Resident Aliens, and non-Permanent Resident Aliens
• Co-Borrower must be borrower's spouse
o If co-borrower is not the borrower's spouse, this is considered a "joint loan". Guaranty will be based on veteran's portion of the loan (often requiring a down payment).
Eligible Products:
• 20-30 Year Fixed, 15 Year Fixed, 3/1 ARM, and 5/1 ARM
Property:
• Eligible Properties: SF, 2-4, Condos, Manufactured Homes, New or Existing Construction
As Modified in the American Recovery and Reinvestment Act
Major Modifications Italicized
February 2009
FEATURE
CREDIT AS CREATED JULY 2008
APPLIES TO ALL QUALIFIED PURCHASES ON OR AFTER APRIL 9, 2008
REVISED CREDIT -
EFFECTIVE FOR PURCHASES ON OR AFTER JANUARY 1, 2009 AND BEFORE DECEMBER 1, 2009
Amount of Credit
Lesser of 10 percent of cost of home or $7500
Maximum credit amount increased to $8000
Eligible Property
Any single family residence (including condos, co-ops, townhouses) that will be used as a principal residence.
No change
All principal residences eligible.
Refundable
Yes. Reduces (or can eliminate) income tax liability for the year of purchase. Any unused amount of tax credit refunded to purchaser.
No change
Purchasers will continue to receive refund for unused amount when tax return is filed.
Income Limit
Yes. Full amount of credit available for individuals with adjusted gross income of no more than $75,000 ($150,000 on a joint return). Phases out above those caps ($95,000 and $170,000).
No change
Same income limits continue to apply.
First-time Homebuyer Only
Yes. Purchaser (and purchaser's spouse) may not have owned a principal residence in 3 years previous to purchase.
No change
Still available for first-time purchasers only. Three-year rule continues to apply.
Revenue Bond Financing
No credit allowed if home financed with state/local bond funding.
Purchasers who utilize revenue bond financing can use credit.
Repayment
Yes. Portion (6.67% of credit or $500) to be repaid each year for 15 years, starting with 2010 tax filing.
No repayment for purchases on or after January 1, 2009 and before December 1, 2009
Recapture
If home sold before 15-year repayment period ends, then outstanding balance of repayment amount recaptured on sale.
If home is sold within three years of purchase, entire amount of credit is recaptured on sale. Applies only to homes purchased in 2009.
Termination
July 1, 2009
(But note program changes for 2009)
December 1, 2009
Effective Date
Purchases on or after April 9, 2008 and before January 1, 2009. Repayment to begin for 2010 tax year.
Information and advice on buying a home, getting a mortgage and managing your home asset. A great resource for first-time homebuyers looking for a guide to the process.
Disclaimer: ActiveRain Corp. does not necessarily endorse the real estate agents, loan officers and brokers listed on this site. These real estate profiles, blogs and blog entries are provided here as a courtesy to our visitors to help them make an informed decision when buying or selling a house. ActiveRain Corp. takes no responsibility for the content in these profiles, that are written by the members of this community.
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