qualifying for a 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.