Since the beginning of 2009, seniors who want to buy a new home can use a reverse mortgage for financing. A government-insured purchase reverse mortgage is a revolutionary way for seniors to purchase real estate. Recent changes in the law allow seniors to buy a home without making monthly mortgage payments.
Eligible property types include: single family home, condominium, townhomes, 1-4 unit multi family homes and manufactured homes (which meet strict guidelines). With the addition of the HECM purchase program, there are a large number of ways to help seniors over the age of 62 who want to buy a home as their primary residence without having to worry about making a monthly payment. However, unlike the HECM refinance program, there are some very different requirements that need to be considered when presenting and creating this product.
First, addressing the differences between an HECM refinance and an HECM purchase:
* The senior must provide the remaining cost of the home upon closing and these funds must be verified in order for the transaction to be fully documented and to comply with all HUD policies.
First, the borrower can only use their own money or proceeds from the sale of assets, such as B. another house or a mutual fund use. Likewise, the borrower can use his savings or pension account as a provider of the necessary funds. However, there are restrictions on gifts, personal loans, credit rebate points, interest rebates, closing cost assistance, home builder incentives, seller contributions or seller financing, credit card advances, secured or unsecured loans from another asset (auto, home, etc.)
Some other requirements for purchasing a reverse mortgage loan include the requirement that the borrower must occupy the property within 60 days of closing. Newly constructed properties must have a certificate of occupancy prior to the date of the reverse mortgage application. HECM purchase transactions do not have a three (3) day cooling off period.
With the current poor economy and the credit crunch and mortgage crunch overall, the reverse mortgage is a safe way to acquire a new home without hurting your wealth, income, or investments. It’s a surefire way to ensure you don’t have to make payments on a new mortgage or worry about a default or foreclosure when you’re buying a home so you can enjoy your well-deserved retirement.