Whether you are already retired or looking forward to retirement there are many reasons it makes sense to relocate; to move closer to the grand-kids, to change to a single story home, to change to a low maintenance home, to have more equity in order to qualify for a Reverse Mortgage, or to just have more cash on hand. Although this program has been around for years many do not realize they can purchase a home with a Reverse Mortgage. Purchasing a home with a RM allows you to avoid paying closing costs twice. The program is called the HECM (Home Equity Conversion Mortgage) for Purchase. Realtors sometimes get nervous helping someone purchase a home as there are many reasons the loan can fall out. If the client were to go purchase a car during the process, their qualification amount may drop below the purchase price. Or if their credit score drops, then the client might not qualify at closing. Because a Reverse Mortgage for Purchase does not go off of the credit score or debt to income ratio there is no worry of the loan falling out for these reasons, it is probably the most secure purchase loan a person can get.
There are a few things that are different in a HECM for Purchase than a standard Purchase transaction:
- A standard Purchase requires mortgage payments to be made. In a HECM for Purchase there are no mortgage payments that need to be made, Ever!
- The Seller cannot pay for any of the buyers’ closing costs. For Example, no home warranty, no home inspection, and the buyer must pay for all of the Title insurance not just half.
- Your Realtor should point this out on the contract and negotiate a lower purchase price.
- The home must meet FHA requirements; which is actually pretty standard. The home must be built after June 15th 1976, be a 1-4 unit Single Family Residence, be your principle residence and a few other standard requirements
The HECM for Purchase satisfies a unique niche in the market, it can help those with debt to income or credit challenges purchase a great home. Or it is a great way to downsize to a more convenient home with no monthly mortgage payment. Find out what a HECM for purchase can do for you today!