Most people think reverse mortgages are only for homeowners who want to tap into the equity in their current home. But did you know that if you are 62 or older, you may be able to purchase your next home using a HECM for Purchase loan?
Here’s how it works.
Instead of paying cash for the entire home or taking out a traditional mortgage with required monthly principal and interest payments, you make a substantial down payment (often around 50%, depending on your age and current interest rates). The reverse mortgage finances the rest.
Benefits of a HECM for Purchase:
No required monthly principal and interest payments for as long as you live in the home as your primary residence. (You are still responsible for property taxes, homeowners insurance, HOA dues if applicable, and home maintenance.)
Buy more home. Because you don’t have to pay the full purchase price in cash, you may be able to afford a home that better fits your retirement lifestyle.
Preserve your retirement savings. Rather than tying up all your cash in a home purchase, you can keep more of your assets available for healthcare, travel, emergencies, or simply enjoying retirement.
A Few Things to Know
A HECM for Purchase is an FHA-insured loan, so closing costs may be higher than with some traditional mortgages. Like all reverse mortgages, the loan becomes due when the last borrower sells the home, permanently moves out, or passes away.
To qualify, the home must be your primary residence, you must be at least 62 years old, and you must demonstrate the ability to pay your ongoing property taxes, homeowners insurance, and other required property expenses.
For many retirees, a HECM for Purchase can be a smart way to right-size, relocate closer to family, or buy a home that better meets their needs without taking on a required monthly mortgage payment.
Every homeowner’s situation is unique. Reverse mortgages are not right for everyone. I believe the best decisions are informed decisions, and I’m always happy to answer questions without obligation.
Education should always come first.
Doug Jones nmls 286668
Mortgage Magic
Certified Reverse Mortgage Specialist
