The reverse mortgage for purchase or Home Equity Conversion Mortgage (HECM) for purchase allows you to buy a new home by placing a reverse mortgage on it. The borrower is not required to pay back the loan until the home is sold or otherwise vacated.
The reverse mortgage for purchase is primarily designed for consumers over the age of 62 who have a majority of their net worth tied up in the home(s) they already own. The reverse purchase typically covers 38 to 71 percent of the new home’s purchase price. The consumer must come up with the rest from the sale of their former home, or retirement account, gift money, or savings.
The reverse mortgage is only available to home owners ages 62 and older. The amount of money you can withdraw is largely based on the youngest borrower on the loan. Use our calculator to see what you may qualify for.
Here are some requirements and responsibilities:
- All borrowers listed must be 62 year or older. Married couples must both be on the reverse mortgage. There are exceptions if you are within six month of turning 62.
- The property used as collateral must be used as the primary residence of the borrower(s).
- The consumer must have no delinquent federal debt.
- The borrower must remain current on all real estate taxes, homeowners insurance, and any other mandatory obligations directly associated with the property.
- Borrowers are responsible for maintaining the property and completing any repairs needed.
- You must receive mandatory counseling with an independent agency approved by the US Department of Housing and Urban Development.
With a reverse mortgage, the borrower retains ownership of the property. Further, the borrower will never owe more than the home is worth regardless of how much they borrow or if the property value decreases over time. You or your heirs also keep the difference if the balance owed is less than your home’s value at the time of repayment. The balance owed is equal to the amount borrowed, plus accumulated interest.
Deciding whether a reverse mortgage is right for you can be confusing. Allow our licensed reverse mortgage specialist, Peggy Loar, to assist you in making the decision. Click below to get started today.