Home Equity Conversion Mortgage (HECM). This product is available to those Buyers that are 62 years of age and older . It is essentially a reverse mortgage used for the purchase of a new property versus the traditional reverse mortgage that is used as a way to access funds without payment obligations on an existing home.I believe that this product could be a very good option for Senior Buyers (62+ years) who would like to move into their forever home but will not realize enough money from the sale of their existing home to buy the property that they have dreamed about. It is a further benefit in that the Buyers do not need to income or credit qualify, so they can buy their forever home while they still own a home and only have 1 mortgage payment to worry about. (Some qualifications exist such as a borrower can only have 1 FHA insured property at a time, the home being purchased must be occupied by the Buyers within 60 days and must qualify as the couple's primary residence etc.) Among other requirements to establish primary residency the couple must occupy the home being purchased for at least 183 days annually. The Reverse Motgage Lender does not require monthly payments but will require that the Senior Buyers remain current on taxes, insurance and, if applicable, homeowner fees and keep the home in good repair.
Proceeds from a HECM on the property being purchased,may be combined with the proceeds from the sale of the existing home, or savings, or even a gift from someone not involved in the transaction, to enable a couple to afford the home of their dreams.
The proceeds from the HECM are not taxed as income, and as stated previously,the dollar amount does not have any monthly payment obligations. It is an equity position in the home being purchased that must be paid off when all Senior Buyers have vacated the home.
This may seem like a scary or foreign concept, but for those people who understand the concept it can be a way for them to move forward with a purchase and it can also be a selling tool for real estate professionals.
Please note that I have tried to consolidate the requirements and features of this program in order to present the concept. There may be some limitations/requirements that I did not include in this article and any Senior Buyer is encouraged to discuss his/her particular scenario with a reverse mortgage lender his/her financial and tax advisor to determine if the product is right for he /she . The writer assumes no responsibility for a Buyers lack of research.
Some information for this article was taken from Wells Fargo Home Mortage "Your Reverse Mortgage Guide" and accompanying handouts.
Contact us today??