Buying a Home
Realtors Increase Their Sales
Well, actually they “could be increasing their sales” if they understood how a senior client could use funds from a reverse loan to purchase a home.
Although the HECM for Purchase has been available for several years, it seems that most Realtors are unaware of it and or they don’t understand reverse mortgages and how they can benefit their senior clients and their own business.
Apparently, some who do know about it, are apprehensive about this mortgage financing option and because of that, they are not considering it’s use for their older clients. And that is because they are unfamiliar with the loan, the benefits and in general how it functions.
They are doing a disservice to their senior clients and themselves because they could receive two commissions. One for the Listing their client’s home and one for selling them their new property.
Generally, the client will sell their current residence and purchase another home using the funds from the sale of their home for the new purchase, typically about 50% for a down payment.
And if they are buying new construction they can apply for their reverse loan prior to the authorities issuing a Certificate of Occupancy, that can speed up the loan process rather than waiting for the Certificate to be issued and then applying for their loan.
It’s an ideal option for seniors to buy as they don’t have to qualify on Debt to Income rations or FICO scores, have no mortgage payments and own the property as the Title will record in their name or Trust.
And overall, it’s a much less stressful experience compared to applying for traditional mortgage financing and can be accomplished quicker as well, taking away much of the anxiety associated with purchasing a home.
And when they pass away, the property will go to their estate and designated heirs, not the Lender.
In conclusion, more Realtors should learn about how to increase their own sales and help their senior clients into properties that better suit their needs as they age.
Reverse Loans and Second Homes
A reverse loan has more than just one use for a homeowner other than refinancing their residence and it’s beneficial to know that funds from the loan can be used to purchase a property.
Most senior homeowners and Realtors are unaware of this option and could be using it to “downsize” into a smaller property or to purchase the “dream” home a senior may wish to buy in a 55+ community or move to an area of the country that they have always wanted to live in.
Another terrific option is to purchase a Vacation home.
Everyone often dreams about having a cabin, a beach house, a home on a lake or some other wonderful property that allows them to enjoy themselves and have fun and quite often, make it a family destination for vacations and family reunions.
If qualifying for mortgage payments using income and credit isn’t realistic on a second property isn’t possible, why not use the equity in one’s residence to complete the purchase and possibly pay “all in cash” for the dream home and not have payments on it, and no payments on the reverse loan because they are not required.
How perfect is that? Two homes without mortgage payments.
How is this possible you are thinking? Contact me to find out and possibly acquire that vacation home you have always wanted.
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.
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.