It's a Question that is asked by Realtors®, Sellers and Buyers alike. Why would a seller choose an offer from a buyer financing their home purchase with an "FHA-HECM For Purchase" loan?
Here are some compelling reasons that many sellers would and in fact do prefer this offer.
1. Owner occupied financing - In the current crazy market there is a growing sentiment among sellers to accept offers from buyers who are NOT investors as they want to see new families building memories and loving the home as much as they did. Homeowners can be pretty sentimental even about a house they are selling.
2. A Reverse For Purchase requires a substantial down payment. We're talking 30% to 50% down - that gives sellers a sense of confidence in the "close-ability" of the transaction.
3. Lower seller closing costs! This is a great reason to accept a Reverse For Purchase offer: According to guidelines the seller is NOT allowed to pay ANY of the buyers closing costs, none, zip, nada. On top of that, the BUYER must pay for their own Owners Policy of Title Insurance as well as the Lenders' ALTA Policy of Title. That saves the seller the highest closing cost, other than commission that they usually incur. The Owners Policy on a sale of $500,000 here in California can run $1,400.00 or more.
4. Easy buyer qualifying - Buying with a Reverse For Purchase is relatively easy as far as qualifying. Since there are not monthly mortgage payments on a HECM Loan, there is only very limited income qualifying - though that is likely to change soon. Buyers must be over 62 years of age, plan to occupy the property as their principal residence and the property needs to be FHA compliant.
It's really all about the listing agent being informed and educated about this fantastic financing opportunity for senior home buyers. It's also a great marketing tool for agents to help older homeowners make the decision to sell and downsize.
Would love to hear what YOU think!
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