Reverse Mortgage For Purchase
What Is A Reverse Mortgage For Purchase?
A reverse mortgage for purchase, also known as a Home Equity Conversion Mortgage for Purchase (HECM for Purchase or H4P), allows seniors to purchase a home while also receiving cash from the equity in their home.
The HECM for purchase loan is different from a traditional mortgage in that it allows the senior to receive cash from their home’s equity rather than making payments to the lender. You can use this cash for various purposes, such as paying for home repairs, medical expenses, or other living expenses. The senior retains home ownership, but the lender holds a lien on the property until the repayment of the loan.
Repayment of the loan is when the senior pays off the reverse mortgage loan, dies, sells the home, or passes it to their heirs. This type of mortgage is an excellent option for retirees who want to buy a new home and not be burdened with a monthly mortgage payment.
How Does A Reverse Mortgage For Purchase Work?
A reverse mortgage for purchase loan allows borrowers to buy a home during the transaction. You can take out a HECM loan and purchase a new home all in one transaction through the reverse mortgage for purchase program.
You may wish to downsize from your current home, which requires extensive upkeep or maintenance. Or, a single-story home may be more attractive than your existing home and may be more equipped for aging. You may want to relocate to your house to be closer to family. Allowable property types, including single-family homes, 2- to 4-unit properties, HUD-approved condos, and planned unit developments.
What Can A Reverse Mortgage For Purchase Be Used For?
As the name suggests, a HECM Reverse mortgage can be used to purchase a new home and not have monthly mortgage payments. A reverse mortgage for purchase requires an initial down payment on a home or cash to cover closing costs and other expenses associated with buying and owning a house. From there on, you only have to pay the property taxes, homeowners insurance, and maintain the home. There are no monthly mortgage payments to make.
Who Is Eligible For A Reverse Mortgage For Purchase?
A reverse mortgage for purchase, also known as a Home Equity Conversion Mortgage for Purchase (HECM for Purchase), is designed for seniors who are 62 or older and are looking to purchase a new home. The senior must have the financial capacity to purchase the home and maintain the property. They also need to undergo an application and complete underwriting by the lender.
The senior must also complete a counseling session to ensure they understand the terms and conditions of the loan and the potential impact on their estate. In addition, the senior must also meet the property requirements set by the lender, such as the home’s condition and the property’s location.
Use a Reverse Mortgage to Purchase a home.
