Learn about purchasing a HECM reverse mortgage

Since early 2009, seniors looking to purchase a new home can use a reverse mortgage for financing. A federally insured “reverse purchase mortgage” is a revolutionary way for seniors to purchase real estate. Recent changes in legislation allow seniors to purchase a home WITHOUT monthly mortgage payments.

Eligible property types include: single-family residence, condominium, townhomes, 1-4 unit multi-family, and manufactured homes (which meet strict guidelines). With the addition of the HECM Purchase program, there are a host of opportunities available to help seniors 62 and older who want to purchase a home as their primary residence without having to deal with a monthly payment. However, unlike the HECM refinance program, there are some very different requirements that must be met when presenting and originating this product.

First, here is the address of the differences between a HECM Refinance and a HECM Purchase:

* The senior will need to provide the remaining cost of the home at closing, and these funds will need to be verified so that the transaction can be fully documented and meet all HUD guidelines.

First, the Borrower can only use their own money or proceeds from the sale of assets, such as another home or a mutual fund. Likewise, the borrower can use his savings or retirement account as a provider of the necessary funds. However, there are restrictions on gifts, personal loans, loan discount points, interest rate reductions, closing cost assistance, builder incentives, seller contributions or seller financing, credit card advances, secured loans or unsecured other asset (car, home equity, etc.)

Some other requirements for purchasing a reverse mortgage home include a requirement that the borrower must occupy the property within 60 days of closing. Newly built 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 rescission period.

With the bad economy right now and the credit crunch and mortgage crisis together, a reverse mortgage is a safe way to buy a new home without affecting your assets, income, or investments. It’s a surefire way to make sure that when you buy a home, you won’t have to make new mortgage payments or worry about default or foreclosure so you can enjoy your hard-earned retirement.

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