Reverse mortgages are something retirees use to help them stay in their home as they get older. Used traditionally as a monthly source of income, reverse mortgages help a homeowner borrow against the value of his or her home. But, there a better use for this type of loan, to buy a home. This little-known fact is something every retiree should consider. Therefore, we offer some insight into buying a home using a reverse mortgage.
What is a Reverse Mortgage?
A reverse mortgage is a type of mortgage in which a homeowner can borrow money against the value of his or her home. No repayment of the principal or interest is required unless the home is sold, or the borrower passes away. To qualify, the borrower must be 62 years or older. The home must be the primary residence. Additionally, the home must have sufficient home equity. Traditionally, this is how a reverse mortgage has been used. But, there is another little-known use for a reverse mortgage, to buy a home.
HECM for Purchase Program
Created by congress four years ago, the HECM for Purchase Program streamlines the buying and selling process. To clarify, it consolidates each process into a single transaction. The program makes it easy for retirees to purchase a new primary home using loan proceeds from the reverse mortgage. For retirees who own a home looking to relocate easily, this program is for you. This is great for those looking to downsize, move to their idyllic city, or simply move closer to family or friends.
Buying a Home Using a Reverse Mortgage
Downsizing (selling) an existing home and buying a smaller less expensive one is the best way to leverage the benefits of a reverse mortgage. Those interested in purchasing a new home using a reverse mortgage must meet certain conditions. To get all the facts, go to HUD.GOV. For borrowers who are looking to maximize their buying potential for a new home, or who want to relocate in retirement, this option can help retirees strategically in achieving these goals.
FAQs & Information
There are many factors to consider before deciding if a HECM is right for you. For this reason, please take time to read through all the FAQs listed here HUD.GOV. The U.S. Department of Housing and Urban Development has all the information one could need during the decision making process. Things that one can find include an explanation of the program itself, how the program works, and requirements among other things. If you are looking to buy a new home, Town Real Estate will be here to guide you through the process of buying your new home. For all other information regarding loans, please use the resources we have listed, or contact your lender.