If you are considering purchasing a new home and are over the age of 62, a new financial tool has become available as of January 2009. The FHA Reverse Mortgage can now be used to purchase a new primary residence allowing seniors to get the same result as paying cash for the home. The outstanding owed balance is never due unless the home is sold, both homeowners pass away or both move permanently from the home, if married.
Many seniors are finding that the home they raised their family in is too large or not properly equipped to handle their current needs. Some would rather be close to children and grandchildren or in a warmer more favorable climate. A smaller updated home with new appliances and fewer chances of repairs would be just the thing to enhance their retirement years. Homes are being sold at record lows and many are seeing great deals that never would have been available if were not for the current recession.
The Reverse Mortgage Purchase or HECM for Purchase program also allows potential buyers to buy a new home with no credit or income requirements, and no payments on the outstanding owed balance no matter how old they may become for as long as they occupy the home.
The following are some of the benefits of using a Reverse Mortgage to purchase a home:
- The title of the property always remains in the homeowners name, never changing ownership.
- The home can be sold at any time without a pre-payment penalty.
- Employment or income is not needed to qualify.
- Good credit and credit score is not required.
- A Reverse Mortgage is only due when both homeowners pass away, sell the home or both choose to vacate the property.
- No monthly mortgage payment on the outstanding owed balance.
- A Reverse Mortgage can not go into foreclosure as long as one of the qualified occupants is living in the home. Considered a non-recourse loan.
- It can be paid like a regular mortgage for a tax deduction or to limit the amount added to what is owed.
The down payment requirements are based on age and current interest rates. The older the person, the less money is needed to purchase the home. Find out how much you would qualify by using a Reverse Mortgage Purchase Calculator.
HUD has a website that has a wealth of information and is the primary provider for Reverse Mortgages. They also provide a list of approved lenders in local areas. Not all bank lenders can offer the program and consumers cannot go to HUD directly to get a Reverse Mortgage, but it's important to find out if the lender is approved with HUD.
The government also requires potential users of a Reverse Mortgage to talk to a HUD approved counseling agency. The counseling can be done over the phone or in person. The counselor will go over the program again, verify there is no one forcing them to do the Reverse Mortgage and verify the bank or lender is in good standing and able to offer Reverse Mortgages. The bank or lender will also provide a list of counselors with phone numbers that can be called for an appointment.
It's a good idea to shop around and see if the company is knowledgeable and has done a Reverse Mortgage as a purchase before committing to use them. Using a Reverse Mortgage as a purchase is a relatively new program and not all companies know or are able to do them. It would also be a good idea to use a company that specializes only in Reverse Mortgages because of the vast difference between Reverse Mortgages and regular forward mortgages.
Another option would be to use a Reverse Mortgage on your current home and use the proceeds to purchase a second home. The money from the Reverse Mortgage can be used in any manner and by doing so the second home can be acquired with out having a monthly mortgage payment. One stipulation the government requires is not to have more than 4 dwellings.
For more information visit www.ReverseSecure.com or call Robert Jones, Sun American Mortgage
at 1-800-490-0526.
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