Understanding the Reverse Mortgage Purchase Program

Posted on Jan 03, 2012 by AnneJohnson · 0

The Reverse Mortgage Purchase, or HECM for Purchase Program, is a unique program that gives seniors the opportunity to purchase a new primary residence with an FHA-insured reverse mortgage.  Like all federally-insured reverse mortgages, borrowers must be at least 62 years of age, own their home, and have a small remaining mortgage balance to qualify for the program.

How the Reverse Mortgage Purchase Program Works

Through the Reverse Mortgage Purchase Program, seniors take a reverse mortgage on their current home and then use the proceeds to purchase a new principal residence.  Seniors are not required to sell their existing home to qualify.  FHA only requires that seniors use the new home as their primary residence.  Seniors who decide not to sell their existing home can increase their income by renting the property.

FHA does, however, require that the proceeds of a borrower’s reverse mortgage cover the price of the new residence.  If a borrower’s proceeds do not cover the purchase price, the individual must come up with the remaining amount.  Fortunately, if a person’s proceeds exceed the price of the new home, the borrower will receive the remaining cash.  In this case, borrowers will not only own their new home free and clear, they will also receive additional money to spend as they wish.

This is not the only benefit of the HECM for Purchase Program. Seniors who take advantage of this program get to move into a new residence without getting a new forward mortgage.  In fact, borrowers will not have to make a single loan payment until they sell the home or pass away.  The goal of the HECM for Purchase Program is to help seniors move to a more suitable residence while strengthening their financial future.

Important Reverse Mortgage Purchase Guidelines

While the HECM for Purchase Program offers many important benefits, seniors must meet a few specific guidelines.  For instance, seniors must move into their new property within 60 days of closing the loan.  Throughout the duration of the loan, the new residence must meet FHA’s minimum property requirements.  This means that borrowers must keep up with home repairs, pay their property taxes, and have homeowners insurance.

If you want to move into a new residence without draining your savings, the HECM for Purchase Program might benefit you.  For more information, call us at 877-267-0274 to learn about this unique opportunity.

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