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Using a Reverse Mortgage to Purchase a Home

Reverse Mortgage to buy a home

Time for a new tool to help you sell homes; Reverse mortgages for a purchase. Traditional Reverse mortgages have been thought of as a way for seniors to stay in their homes, but more recently we have seen Seniors using reverse mortgages for a number of reasons.

Traditional Reverse loans can be used to:

Pull lump sums of cash from an existing home

eliminate mortgages and debt, buy another home, there are no limitations here.

Set up a monthly income stream

Have your home pay you to live there, in most cases Tax free (always check with a CPA here)

An equity line for surprise expenses

A line that will grow every year to use when the need arises.

(or any combo of the above)

All with no recourse, no payment and you can still leave your house to the kids and it will continue to grow in value over the years. We have had many Seniors using reverse Loans to give down payment money to their children so they can buy a home, and they can enjoy leaving money to their kids and still be "there" to see them enjoy it!

Now available for purchase loans, a Reverse Mortgage will allow someone to buy a home and have no mortgage payment. Perhaps you have clients that want to pay cash for their retirement home, but sold their home for less than they thought, or maybe they fell in love with a more expensive model or development and cant afford a traditional forward mortgage....

Think Reverse:

No Monthly Payment
No Recourse,
No Worry about Credit or Qualifications (other than age).

The borrower must be at least 62, and the value of the home are the 2 determining factors in the available loan amount. Typically the older the buyer, the more they can borrow. A reverse mortgage is the only true No-Doc loan left in today's environment. Credit is not an issue, Borrowers do not need a job, Just a down payment.

These are not low down payment loans. For the younger buyers using a reverse for a purchase will need approximately 60% down, but this number will change based on age, the older you are the more you can borrow.

(Traditional Reverse loans for an existing home will actually allow larger loan amounts, but we are limited to FHA limits on most of these, and the HUD program is not available for a purchase)

As always, I am just a phone call away to help you with all of your residential lending needs. I look forward to putting my 20+ years experience to work for you on our next deal together.

Have a Great Day!

Rob

Robert L. Rauf
Countrywide Bank FSB
Cell: (732) 740-0175
Office: (732) 505-2470
Robert_Rauf@Countrywide.com
WWW.RobertRaufHomeLoans.com

Building financial security, one home owner at a time.

Posted by Robert Rauf on 04/30/2008 08:37 AM

Comments (8)

reverse mortgages, purchase, buyer tools, realtor tools, tips, advice, real estate

8 Comments on Using a Reverse Mortgage to Purchase a Home

I was very surprised that though there are no limitations for single family homes, there is a limitations in regards to the condos. Only FHA approved condos. I got the FHA site and tried to see which condos in Daytona Beach are approved and found only one - St. Maarten Condo. Very surprising. Can't figure why out of hundreds condo projects only one is approved.

This is strange.

04/30/2008 08:50 AM

by Jon Zolsky (FunCoast Realty LLC)

Hi Robert,

What are the fees and points involved with the reverse mortgage?

04/30/2008 08:57 AM

by Bill Exeter (1031 Exchange Expert) (Exeter 1031 Exchange Services, LLC)

Jon,

I dont think the condo issue is as bad as you may think. I need to double check for you to be sure... But a reverse uses a lot of the traditional FHA "stuff" behind the loan. For a traditional forward mortgage the FHA list has pretty much gone the way of the DoDo bird. We can do spot approvals with a form that is almost identical to the Fannie Mae form. That is what my gut is telling me... But I will follow up with an underwriter to be sure for you.

04/30/2008 09:00 AM

by Robert Rauf (Countrywide Home Loans)

Good morning Bill,

Did you have anything specific in mind? I could work up real numbers for you.

On the surface Reverse mortgages seem expensive since everything is laid out on paper, but the costs are actually similar to traditional forward mortgages, but the beauty of the reverse is that things are rolled into the loan, not out of pocket. There are points. the Reverse for Purchase does not have MIP, where as the FHA HUD program for an existing home does have MIP. Up front we only collect enough money to pay for the appraisal.

04/30/2008 09:05 AM

by Robert Rauf (Countrywide Home Loans)

Hi Robert,

I do not have a specific transaction right now. We are always keeping our eyes open for new financing ideas for our clients. I have never sat down and analyzed the reverse mortgage, but I have heard that the points can be high up front.

We are a 1031 exchange qualified intermediary, and a lot of our clients are 60 plus years old, so I'm trying to learn more about reverse mortgages.

04/30/2008 09:56 AM

by Bill Exeter (1031 Exchange Expert) (Exeter 1031 Exchange Services, LLC)

Bill,

for a reverse loan the fees are not bad at all, Traditional closing cost for your area, and the loan will have 2 points. You cant get away from points on a reverse loan, but they do not have to be up front, they can be part of the loan.

Jon,

You can do a spot approval on a condo with out any problems.

04/30/2008 10:26 AM

by Robert Rauf (Countrywide Home Loans)

Robert,

Thank you very much. I am forwarding the info to the gentleman, who contacted me.

Thaks again.

04/30/2008 05:02 PM

by Jon Zolsky (FunCoast Realty LLC)

You are welcome Jon,

I am glad I was able to help. There have been a lot of changes over the years. the Traditional Reverse mortgage is a HUD loan, the Reverse for a purchase is not. F

HA guide lines have changed a bit to stay competitive with conventional, which basicaly means it has gotten much easier to do FHA loans. The worries of Termite inspections, VC sheets etc just do not exist on FHA loans (speaking in the Traditional Forward world here).... If you deal with a dirrect lender, FHA is a great option for many buyers. Just be sure the Loan Officer you deal with is well Versed in FHA, unfortunatly there are many people in the business that cant spell FHA, especially if they have only been in the business for 5 years or so... Fortunately (or unfortunately!) I have been doing FHA loans for 20 years... back in the days when we actually qualified people... Big advantage now that we have had many of the "easy" programs run away in fear of defaults.

I am happy to help... so any questions just drop me an email.

04/30/2008 05:20 PM

by Robert Rauf (Countrywide Home Loans)

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