Buying a Home

Buying a Home With a Reverse Mortgage

Although the ability to use a Reverse loan for purchasing a property has been available for quite some time, not too many seniors know about it and neither do Realtors.

But for a senior that wants to “down-size” from a large home into something smaller and more manageable, it is an ideal option to use for the new home without having to qualify using income, credit scores and debt ratios, as are necessary on traditional financing.

The FHA HECM loan not only can be used for purchasing but the proprietary  ( Not an FHA mortgage) Jumbo Reverse loan may also be used to purchase homes up to $6,000,000.00 for those seniors that are looking at more expensive properties above the HUD Lending Limit of $625,500.00.

Generally the buyer of the new property will be selling their current home and the funds from that sale will be applied to the down payment on the new purchase.

The actual Reverse loan amount that they will be entitled to receive, is calculated on the age of the youngest person and the purchase price of the new property.   And that figure will be used for the new loan and the buyer would need to come in with funds  ( down payment) per the difference between the sales price and the Reverse loan amount.

Using this option to purchase a property if you are a senior, is certainly much easier than going the conventional route of loan application.

Plus the escrow can close much quicker than a conventional loan.

If you want additional details about this option and or some figures, please contact me.

 

 

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Using a Reverse Loan to Buy a Home

Not too many people are aware of the fact, that a Reverse loan can be used to purchase a home.   I have shared this information with many Realtors and yet they continue to not see what a great business opportunity this could be for them, particularly if they have a large client base they have established over many years.

The advantage of using a Reverse loan over a traditional one, makes it much easier to qualify for financing.   With a Reverse loan, income is not documented and FICO scores are not considered and they are not obligated to make mortgage payments.

As long as the applicant is at least age 62, will occupy the property and the funds for the down payment on the new property can be documented, they are as good as “approved”.

I am going to share an article over several consecutive posts about how one couple purchase a “second” home by using the funds from a Reverse loan that they acquired on their primary residence.   A clever way to buy that “vacation” property.

10/30/13 Reverse mortgage strategy can open door to second home – Spokesman.com – Oct. 20, 2013
Tom Kelly

Reverse mortgage strategy can open door to second home

“A reverse mortgage must be made against a primary residence, but the loan can absolutely be used to help purchase a second home.

While the proceeds of a reverse mortgage typically help seniors to “age in place” by making their home more comfortable for their retirement years, there are no limitations on how reverse funds can be used.

For example, the Caseys were seeking to lower their monthly mortgage payment on their primary home so that they could afford the monthly payments on a recreational cabin.

Instead of cashing other assets, paying the capital gain tax and plunking down the net amount as the cabin’s down payment, the couple took out a reverse mortgage, which accomplished the same goal.”

To Be Continued.

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