Your Senior Home Buyers Can Use a Reverse to Buy Their Dream Retirement Home

SRES Realtors - The HECM “Reverse For Purchase” Can Help Your Clients to Buy Their Dream Retirement Home.

HECM stands for Home Equity Conversion Mortgage and FHA defines “HECM for Purchase” as a “R.E. purchase where title to the property is transferred to the senior buyer, which the buyer will occupy as a principal residence, and, at the time of closing, the HECM first and second liens will be the only liens against the property.” Quite a statement!

Here are a few reasons to consider an FHA Reverse (HECM) Mortgage for purchase:

• Easier Qualifying – Your clients will not have to “qualify” for monthly mortgage payments on the new purchase transaction. A significant detail to senior buyers on a fixed income. * Certain transactions will require some “qualification” – they must qualify for costs related to other real property owned so ask your Reverse Mortgage professional for details.
• More Purchasing Power – Gives your buyers more buying bang for their buck. They have more purchasing power than if they had to pay all cash allowing them to buy a better quality home, in a nicer neighborhood.
• Simplified Transaction – Back in the day, your senior buyers would have to purchase the home with cash or traditional financing and then afterward, refinance into a reverse as a separate transaction. Now it can all be handled in one transaction.

How does this product help you, the SRES Realtor?

A reverse for purchase can benefit you in 2 major ways.

• First is Income – Higher and Double Commissions - By allowing you to list a seniors current home for sale and showing them how they can afford to buy a home or condo instead of renting, you will set yourself apart from other agents & brokers – and earn a commission on both properties! When your buyer can afford a higher value home, you earn a bigger commission.
• Second - Client Referrals. As a professional Realtor you already know how putting your clients’ best interests first generates trust and rapport, setting the stage for happy clients who will “sell you” to their friends and family. The specialized knowledge of using a HECM for purchase places you at the top of your game. Clients expect you to know about all things “Real Estate” - exceeding client expectations is one more key to generating new client referrals.

 Here’s how it works - The FHA Maximum Lending Limit for Reverse Mortgages is $625,500.00 Down Payment (LTV) varies Depending upon age and upon current Expected Rate.

Your Reverse Mortgage consultant will utilize a special HECM Calculator to help you to determine the amount of funds your buyer will need to bring in. Conversely, if you know your available funds for a down payment, your consultant can estimate the maximum purchase price for your buyer. This will allow you to select appropriate properties to show your clients.

In order to ensure the smooth processing and closing of this type of transaction, it is recommended that the selected Title and Settlement Agency’s have prior Reverse Mortgage closing experience. Closing delays can result from inexperienced vendors.

Here is an example of a purchase scenario  - Mrs. Helen Homeowner (75 years old) is purchasing a single story home and selling her large family home. Her proceeds will be approximately $185,000. With $185,000 to put into a new home and a HECM loan she can purchase a home valued at up to $550,000! I think any child would be ecstatic, cause now mom can afford to be in a newer home in a senior gated community - safe & secure. (Based upon rates & features available 1/18/2011)