Buying A Home

Reverse mortgage for purchase

You’ve worked hard to get to this point. Now you’d like to live in a “right-sized” home that fits your needs today and get comfort and financial peace of mind for the future. Perhaps you want to move to a home that’s closer to family, more maintenance-free, or in a more social neighborhood. But maybe you don’t think you can afford to move because of your financial obligations, income, or other issues. Fortunately, there’s an established financing option for homebuyers who are 55* and older that can help you get the funds you need to buy the home you want.

What is a reverse mortgage for purchase?

This Federal Housing Administration (FHA)-insured ^|| home financing program is designed specifically for homebuyers who are 55* and older. It’s specifically designed to help you get the funds you need to buy the home you want at this point in your life — with fewer financial worries and limitations.

Single-family homes, townhomes, and FHA-approved ^|| condominiums are eligible as long as you use the home as a primary residence.

How does it work?

You can purchase a home by combining a one-time investment of your own funds (your down payment) with loan proceeds from a reverse mortgage to complete the transaction. As with a traditional “forward” mortgage, the home you are purchasing secures the loan.

However, unlike a traditional mortgage, there are no monthly mortgage payments, which can help boost your cash flow. You own the home as long as you live in it. The loan does not have to be repaid until you sell the home or no longer live there as your primary residence. In order for the loan to remain in good standing, you must meet certain home ownership obligations — which include maintaining the property and keeping current with property-related taxes and insurance payments.

Comparing your options to purchase a new home:

ALL CASH

You own the home free and clear

Traditional Mortgage

Option to make a minimum down payment and limit up-front investment
Builds equity as you pay down the loan

Reverse mortgage for Purchase

Flexible payment feature: Monthly principle and interest payments are optional*
Can give you the ability to buy the home you really want
Allows you to keep more assets and can increase cash flow

*As with any mortgage, you must meet your loan obligations, keeping current with property taxes, insurance and maintenance.

Paying all cash vs. HECM for Purchase

Out-of-pocket investment

HOME = $350,000

Here’s a hypothetical example:

Let’s say your home is owned free and clear, and you want to buy a smaller home that’s closer to your children and their families. The price of the home you want is $350,000, and you’re asking $425,000 for yours.

house1

OPTION 1

All cash

OPTION 1

You could use the money from the sale of your home to pay all cash for the new one. After paying realtor fees and taxes, this would leave you with about $40,000 and no monthly mortgage payment.

house2

OPTION 2

HECM for purchase Down payment required

OPTION 2

With the reverse mortgage for purchase, you could buy the new home with only $165,737 of your own funds — keeping $144,263 more than if you paid cash, and still having no monthly mortgage payment. This could make it easier for you to afford options or upgrades you want or need and invest the remaining funds in your retirement.

Here’s a hypothetical example:

OPTION 1

You could use the money from the sale of your home to pay all cash for the new one. After paying realtor fees and taxes, this would leave you with about $40,000 and no monthly mortgage payment.

OPTION 2

The information being displayed is for illustrative purposes only. Actual cash required may vary and is based on age of youngest borrower, interest rate, home value, and other factors. Please contact Reverse Mortgage Funding LLC (RMF) for details about credit costs and terms. Closing costs may include an origination fee, third-party closing costs, and an FHA Mortgage Insurance Premium. Interest rates and funds available may change daily without notice. This down payment range assumes closing costs will be financed into the loan.

Contact me to request your Reverse Mortgage for Purchase Guide

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Find out if you qualify for a reverse mortgage for purchase

You need to meet the down payment requirement — which typically ranges from 45% to 62% of the purchase price^¶ — and prove adequate income to assure the lender that you can meet your obligations to pay for property taxes and maintenance. For the down payment, the money must come from assets you already own, and not from another loan or borrowed funds. Typically, your down payment must come from savings, the sale of your current house, or a gift from a family member.

Otherwise, requirements are simple and straightforward. You must be 55* or older; the home you buy must be your primary residence. To learn more and find out if you may qualify, contact us today. ^|| This material has not been reviewed, approved or issued by HUD, FHA or any government agency. The company is not affiliated with or acting on behalf of or at the direction of HUD/FHA or any other government agency.

^¶This down payment range assumes closing costs will be financed into the loan. The information being displayed is for illustrative purposes only. Actual cash required may vary and is based on age of youngest borrower, interest rate, home value, and other factors. Please contact Reverse Mortgage Funding LLC (RMF) for details about credit costs and terms.