Using a Reverse Mortgage for a home purchase

Using a Reverse Mortgage for a home purchase

As of early 2009, seniors that are looking to purchase a new home can use a Reverse Mortgage for the financing. A federally insured "Purchase Reverse Mortgage" is a revolutionary way for seniors to purchase Real Estate. Recent changes in legislation allow for seniors to purchase a home with NO monthly mortgage payments.
Eligible property types include: Single family residence, Condo, Townhomes, 1-4 Units Multi-Family, and Manufactured Homes (meeting strict guidelines). With the addition of the HECM Purchase program there a great number of opportunities available to help seniors, 62 years of age, who would like to purchase a home as their primary residence without dealing with a monthly payment. However, unlike the HECM Refinance program, there are some very different requirements that must be addressed when presenting and originating this product.

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

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

First, the Borrower may only use their own money or proceeds from sale of assets, such as another home or a mutual fund. As well, the borrower can use his savings or retirement account as the provider of the necessary funds. However, there are restrictions on gifts, personal loans, Loan Discount Points, Interest Rate Buy Downs, Closing cost assistance, builder incentives, Seller contributions or seller financing, credit card advances, secured or unsecured loans from another asset (car, home equity, etc.)

Some other requirements for purchase of a Reverse Mortgage home include the requirement that the borrower must occupy the property within 60 days of closing. Newly constructed properties must have Certificate of Occupancy prior to the date of the application for the Reverse Mortgage. HECM Purchase transactions do not have a three day (3) rescission period.

With the bad economy right now and the Credit Crisis and the Mortgage Crisis all together, the Reverse Mortgage is a safe and secure way to purchase a new home without affecting your assets, income, or investments. It is a safe way to ensure that when you buy a home, you will not have to make payments on a new mortgage or worry about default or foreclosure so that you can enjoy your well-earned retirement.