A Reality at Age 62+ | New Dream Home + No Mortgage Payments?

Dated: May 11 2023

Views: 741

What does HECM stand for? Home Equity Conversion Mortgage. Here, we'll focus specifically on HECM for Purchase. This isn't something new; it has been around since 2009. What I love most is how this can keep more cash for your retirement and increase your purchasing power at the same time!

As your Seniors Real Estate Specialist® (SRES®), I thrive to be the greatest resource possible to clients and their families. Keeping current with industry updates and utilizing knowledge to advise clients is part of what I love about being a Real Estate Professional.

Below you will find some basic information about HECM for Purchase published by Reverse Mortgage Specialist, Laurie MacNaughton of Atlantic Coast Mortgage. Click HERE to receive full guide via email.

“It’s a big decision, but we’re ready to make the move.”

You’ve made the decision: it’s time to move. For some homeowners, the long-time home just isn’t a fit anymore - it’s too big, there’s too much yard, the upkeep is too expensive. For others, property taxes are getting out of hand, and the neighborhood doesn’t feel like home anymore. But for many, it’s time to move closer to adult children.

Traditionally, you’ve had two financing options: an all-cash purchase or a new forward mortgage. Both have potential drawbacks. With an all-cash purchase, homeowners pin down a significant amount of liquidity. On the other hand, a new forward mortgage comes with a new monthly mortgage payment obligation. That payment can become a true backbreaker as homeowners move deeper into their retirement years.

There’s a third option...

If you’re 62 or older, you have another mortgage option that may be a better fit in the retirement years, namely a Reverse for Purchase home loan, also known as a Home Equity Conversion Mortgage (HECM) for Purchase*. By using a Reverse for Purchase home loan to buy your retirement home, you double your purchasing power without picking up a newly minted mortgage payment in your retirement years.

Check out this video to get the basics:

Do I Qualify?

Qualifying for a Reverse for Purchase home loan is notably easier than with a traditional loan. This is a fully documented, FHA-insured home loan, and there are federally mandated documentation requirements, some of which include:

  • At least one borrower must be 62 or older
    This is financing for a primary residence (no second homes or rental properties)
  • You must have enough income to show a monthly residual income based on household size
  • You must receive HECM counseling from a government-approved agency.

There are:

  • No employment requirements
  • No minimum or maximum income requirements* 
  • No maximum debt ratios
  • No minimum credit score

The down payment is based upon the age of the youngest titleholder, but typically the older the homeowner, the smaller is the down payment.

Because it’s still your home, taxes and insurance must be kept current, condo dues or homeowners association dues must be paid, and the home must be maintained to FHA minimum standards.**

This is a 100% non-recourse loan.

Here’s what that means:

Reverse mortgage borrowers can NEVER owe more than the sale price of the home. If the home cannot repay the loan balance, the home will still “kick in” what it can; no deficiency judgment can be taken against the estate or heirs, nor are any other assets ever at risk.

*This is a fully documented home loan, in which all income and assets are documented and assessed as part of the application process. Not all applicants will qualify. Advertised rates, fees, and program guidelines are subject to change without notice.

**Please note that failure to pay these obligations may result in foreclosure.

Source: Laurie MacNaughton, Reverse Mortgage Specialist of Atlantic Coast Mortgage. 


Reach out today to connect with myself and Laurie to see if this is the right fit for you or your family, making a new dream home a reality!

Click HERE to receive full guide via email.

VIVIAN HO
Lodestone Real Estate
Broker, REALTOR®
704.898.7667
@lodestonerei

 

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Vivian Ho

Born in Hong Kong, Vivian Ho relocated to the suburb of Detroit with her family at a young age. She went on to study at Michigan State University and earned a Bachelor of Arts degree in Finance, and t....

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