HECM For Purchase (Home Equity Conversion Mortgage)
Buy a Home with a Reverse Mortgage
Buy a Home Without Mortgage Payments
If you are 62 years or older, the Home Equity Conversion Mortgage (HECM) for Purchase Loan can help you buy your next home without required monthly mortgage payments. The HECM for Purchase is a Federal Housing Administration (FHA) insured home loan that allows seniors to use the equity from the sale of a previous residence to buy their next primary home in one transaction.
Regardless of how long you live in the home or what happens to your home’s value, you only make one, initial investment (down payment) towards the purchase.
Customer benefits include:
- Eliminates monthly mortgage payments
- Increases your purchase power
- Preserves your cash
Why Consider A HECM For Purchase Loan
No matter what your needs may be, a HECM for Purchase Loan can help increase purchasing power and flexibility when buying a primary residence. Many home buyers use the HECM for Purchase Loan to:
• Down-size to a smaller, lower maintenance home
• Buy a home closer to family or friends
• Lower their cost of living during retirement
• Enjoy carefree living in a senior housing community
Best of all, since monthly mortgage payments are not required, a HECM for Purchase Loan may help preserve your hard-earned savings and improve cash flow. You will continue to own and maintain the title of your home for as long as the property remains your primary residence.*
• Youngest titleholder must be 62 years or older
• Purchased home must be a primary residence occupied within 60 days of loan closing
• Property must be a single family home or an FHA approved condo
• The difference between the purchase price of the new home and the HECM loan proceeds must be paid in cash from qualifying sources such as the sale of prior residence, home buyer’s other assets or savings
• Borrower must complete a HUD approved counseling session
The amount of money you may receive from a HECM for Purchase Loan depends on the age of the youngest titleholder, current interest rates and fees, and the lesser of the appraised value, the purchase price or the FHA lending limit.
Safeguards for Borrowers
• Mortgage Insurance Premium (MIP) ensures the amount owed on the loan can never be more than the value of the home at time of sale
• Independent HUD counseling is required prior to loan application
• Lender may only look to the value of the home for repayment; no other assets may be attached if the loan balance grows beyond the mortgaged home value (non-recourse loan)
Purchasing A Home With A HECM For Purchase Loan Example
Don and Lisa, both 67 years old, want to buy a lower maintenance home. Don and Lisa then contact Mark Hammond to determine eligibility. Mark provides them a solid plan of action to purchase a town home, for example.
Mark shows the buyers how the HECM for Purchase Loan could provide the funds they need for their new home. Don and Lisa can use proceeds from a reverse mortgage for the “lions share” of the home’s cost and a down payment from part of the sale of their existing home. No payments are required as long as they live in the home.
*The borrower will be responsible for paying property charges including homeowner’s insurance, taxes and maintenance of the home for the term of the loan. Interest will accrue on the loan balance.
Why not find out–just for fun–how much of a home you could buy based on your current home equity and liquid assets? Try Mark’s Reverse Mortgage Calculator right now!