How would you like to purchase a new home without making monthly payments? While this might seem unlikely, it is possible for older adults who are eligible for a reverse purchase loan, officially known as the HUD HECM Reverse Mortgage program.
Once your eligibility for the reverse mortgage loan program has been established, your lender will put your information and preferences through a variety of scenarios to figure out how much of a reverse mortgage loan you could qualify for and in what ways you could receive your money from that loan.
Need to find a reverse purchase loan lender? Our reverse mortgage experts at MortgageAdvisor.com can help you find the one that’s right for you today. Fill out our quick 1-minute form to have a Mortgage Advisor contact you.
Buying a Home With A Reverse Purchase Loan
Through HECM reverse mortgage purchase loans, older adults age 62 or older can use the proceeds from a reverse mortgage to buy a new primary residence. The program works in such a way that seniors both buy the new home and get a reverse mortgage in one convenient transaction. This program especially comes in handy for seniors wanting to relocate to a new home to downsize, better fit their lifestyle (Ex: one-level properties, ramps, wider doorways), or be closer to family members.
Reverse Mortgage Purchase Eligibility Requirements:
- You have to be 62 years of age or older.
- The home being purchased must be your primary place of residence.
- The home being purchased must measure up to HUD’s property requirements.
Like most purchase loans, reverse mortgage purchase loans may require a down payment, but this can be provided in a few ways: from the sale of your present home, through cash that you’ve obtained by selling off some of your assets, or via funds gifted to you by family members.
Rules on HECM Reverse Mortgages
With fewer requirements than normal, an HECM reverse mortgage can give you means, from the equity in your current home, to purchase a home—and it often does so without creating any additional monthly payments for you and all in one single transaction. Reverse mortgage purchase loans, however, are not without their own rules. For instance, since reverse mortgage purchase loans are insured by the government, they are subject to national lending limits set by the Federal Housing Administration (FHA).
Also, reverse mortgage purchase loans fall into the category of no recourse loans, which means that, in the event that the borrower defaults on the loan, their lender can sell the property to recover their investment, but they can’t seize any other funds from the borrower.
Are you a senior thinking of buying a new home with a reverse mortgage purchase loan? Fill out our quick 1-minute form to have a Mortgage Advisor contact you.