Reverse Mortgage For Purchase

What is Reverse Mortgage for Purchase?

• It is called "Home Equity Conversion Mortgage (HECM)" for Purchase. 
• It is an FHA-insured reverse mortgage.
• It enables senior homebuyers, age 62 or older, to purchase a new primary residence and obtain a reverse mortgage in simultaneous transactions with NO monthly mortgage payments.
• Allows buyers to combine reverse mortgage proceeds with a down payment from their current home sale or other assets to purchase a new home.

How does "Reverse Mortgage for Purchase" Help Seniors?

• Purchase a new home without taking on a new monthly mortgage payment.
• Purchase a primary residence suitable for their current needs.
• Purchase a home in a senior housing community.
• Relocate closer to friends and family members.
   

How does the program work?
 

• Bob and Ann are both 74 years old and want to move to a single story home near their children.
• They own their current two-story home free and clear.
• The proceeds from the sale of their primary home ($130,000) does not provide sufficient funds to purchase their new home.
• To achieve their goal they use a "Reverse Mortgage for Purchase" program.  This is how it works:
  • Purchase Price of Home near their kids = $300,000
  • Reverse Mortgage proceeds                  = $170,000
  • Cash needed to close                            = $130,000
• Bob and Ann combine the $130,000 from the sale of their home with $170,000 in Reverse Mortgage to purchase the new home and have NO monthly mortgage payments.  
• Bob and Ann hold title to their new home.

What sources are allowed for the cash needed to close?

• Proceeds from the sale of departure home,
• Homebuyers savings or sale of other assets.

What Property types are eligible?

• Single family homes
• HUD-approved Condos
• Planned Unit Developments (PUDs)
• Two- to Four- unit properties (one unit must be owner occupied).