If you’re 62 or better, you can use a reverse mortgage loan to purchase a new home. A reverse mortgage loan gives you the opportunity to potentially increase your purchase power, while eliminating monthly mortgage payments as long as you pay taxes and insurance, and maintain the home.
BENEFITS of BUYING
IT’S TIME TO DO WHAT YOU WANT TO DO
Here are a few things a reverse mortgage loan could help you with:
- Purchase in a 55 plus community
- Increase your purchasing power and flexibility
- No monthly mortgage payments (taxes, insurance, and maintenance required)
- Move closer to family, better weather, or a more appropriate home
- Purchase a home for 30-70% down*
Close in as little as 17 days**
*The down payment required is determined on a number of factors, including borrower(s)’ age (and non-borrowing spouse’s age, if applicable); current interest rates; and the lesser of the home’s appraised value or purchase price.
**17 day close is based on receiving an appraisal within 10 days of ordering it with no contingencies.
- One spouse must be 62 years or older to be eligible for a reverse mortgage. In Texas both spouses must be 62 years or older
- Home must be a primary residence (live there 6+ months per year)
- The property must be a single-family home, a 2 to a 4-unit dwelling or FHA-approved condo
- Must meet minimal credit and property requirements
- Must receive reverse mortgage counseling from a HUD approved counseling agency
- Must not be delinquent on any federal debt
The houses and stories are used for illustration purposes only. Houses may not be available for purchase. This information is provided as a guideline; the actual reverse mortgage available funds are based on current interest rates, current charges associated with loan, borrower date of birth, the property sales price and standard closing cost. Interest rates and loan fees are subject to change without notice.
When you purchase a home with a reverse mortgage, will the loan be held on your existing home or your newly purchased home?
The reverse mortgage will be held on the newly purchased home as your primary residence. The down payment you will need to bring to closing is usually between 30-70%.
How will the lender determine how much money you will need at closing?
The required down payment on your new home is determined on a number of factors, including your age or eligible nonborrowing spouse’s age, if applicable; current interest rates; and the lesser of the home’s appraised value or purchase price.
What sources of funds (money) are allowed when you purchase a home with a reverse mortgage?
The money must come from your liquid assets (bank accounts, CDs, retirement accounts, etc.) or from the documented sale of other assets you may have (your present home for example).
Why is my down payment higher with a reverse mortgage?
Your down payment is higher initially because you will not be required to make a mortgage payment (except for taxes and insurance, and the home must be maintained). With a traditional mortgage, you would potentially lose more in cash flow over the years because of the consistently required payments.
Remember the reverse mortgage for purchase also can allow you to purchase a more expensive home than what you would otherwise be willing to commit to in payments for the next 20-30 years.