The Home Equity Conversion Mortgage (HECM) for Purchase allows seniors 62 years of age and in some cases as young as 60 to purchase a home through a Reverse Mortgage. This can be a valuable option for seniors who desire a new home that better meets their physical needs, wish to move closer to family members, want to get a fresh start or simply wish to downsize. It enables the Senior to retain assets because the Reverse Mortgage pays a portion of the purchase price. Additionally, a Reverse for Purchase can enable the Senior to purchase a higher valued home in many cases. Less out of pocket cash and access to more funds for that dream home! Since this is a reverse mortgage product, monthly payments are not made on the new house. You enjoy your new home without making a monthly payment the entire time you live in it!
Unlike the traditional Reverse Mortgage which is essentially a refinance accessing a portion of the home equity, the Reverse for Purchase pays a portion of the sales price of the home based on the borrower’s age. The remaining portion of the purchase price comes from the borrower’s personal funds. These funds can come from the sale of your existing home, from investments or from savings. You cannot borrow the funds for your down payment or personal portion of the sales price. Typically, the personal portion/down payment required is based on the borrower’s age so the older the borrower is, the more the Reverse for Purchase will provide and the lower the cash to close/down payment requirement will be. HECM for purchases are subject to the same guidelines as a standard HECM loan.
These loans do not take a long time to obtain. You can generally expect a 30 to 45 day period of time for processing from start to finish just as you would have with any other purchase loan. Realtors can help their senior clients by letting them know about the Reverse For Purchase option.