Something is surely growing, that is HECM for purchase loan. This post will have guidelines explained in an attempt to help consumers understand this unique financial product a bit better. In 2008, Congress passed the HECM for purchase loan and it is now picking up steam.
Who is the HECM for purchase loan good for? It would be fantastic for those who have access to a significant down payment for a property. Many wish to keep their capital liquid. Whether that be for investment into a retirement account or just for peace of mind, some do not wish to tie up hundreds of thousands of dollars.
Rather than putting down 100% of their funds to have a mortgage free property, a homeowner over 62 can now put down on average 40%. Despite the 60% difference, there would be no mortgage payment if approved. It is important to note, similiar to a traditional mortgage other types of bills must still be paid. These include homeowners association fees, real estate taxes, and homeowners insurance.
The percentages above are just hypothetical, meant for example purposes. The amount of downpayment is determined by the home's value, your age, and other important factors. For more information, feel free to view this page: http://www.shopreversemortgages.com/hecm-for-purchase-loan-explained-guidelines-closing-costs/
In short, the HECM for purchase loan will allow you a new route around the traditional mortgage to get into a new home for far less money if you were considering purchasing the new home with cash.
There are some guidelines that must be followed for this reverse mortgage product:
- Concessions from the seller are prohibited.
- After the loan is closed, you must move into the new house within 60 days.
- The new home with the HECM for purchase loan cannot be an investment property, it must be your primary residence.
- Proof of funds from your downpayment must be submitted.
Allowing a significant portion of cash to remain liquid is very appealing to many astute retirees. For those who do not wish to have their funds tied up in real estate this is a fantastic alternative.
Keep in mind, many HECM for purchase calculators are not 100% accurate. They were created to give one a rough estimate on the amount of money which would be needed to be put down. So if you are truly interested in this product, it is best to reach out to a reverse mortgage specialist who would be able to better answer these questions. Taking this approach is more accurate than trying to gather information from a HECM for purchase calculator which may or may not be accurate.