If you are a senior who is at least 62 years old, and you are looking to buy a home to use as your primary residence, you owe it to yourself to look into what an HECM for Purchase can do for you.
Here at Preferred Reverse LLC, our people have a significant depth of experience and knowledge when it comes to HECM for Purchase transactions. So, if you are interested in learning more, please reach out! You can head over to our Contact Page to find out which of our reverse mortgage professionals in your area and can give you tailored and personalized advice.
You can also request for a quote using our online reverse mortgage calculator on this site.
How an HECM for Purchase Works
The defining characteristic of an HECM for Purchase is that it allows you to apply a reverse mortgage to a planned home purchase as part of a single procedure. This merging of two transactions is important because it allows you to avoid paying closing costs twice and saves you money!
How it works is that part of the cost of the new property will be shouldered by the reverse mortgage. The exact amount that can be covered will vary and depends on the age of the youngest borrower. It is best to consult with us so that you can confirm how much of your new home’s cost can rely on the HECM for Purchase.
For example, if you are looking to purchase a property worth $300,000, a reverse mortgage on that property could conceivably take care of $150,000 of the purchase price (maybe more). The remaining amount would then have to be covered by an eligible funding source, such as cash from savings, the sale of other property, a retirement fund, or something similarly allowed.
Unlike with a regular mortgage, the borrower in an HECM for Purchase will not have required monthly payments. You are still required to pay your property taxes, home owners insurance premiums, and home maintenance costs on time. The loan balance will become due when the home is no longer the primary residence of the last remaining borrower.
Other HECM for Purchase Requirements
For the HECM for Purchase to proceed, certain requirements need to be met. There are the basic requirements of any reverse mortgage, such as age (borrowers must be at least 62 years old) and living arrangements (the property bought must become the borrower’s primary residence).
However, there are other additional requirements to take note of for this type of reverse mortgage loan as well. For example, if the property is one that has been newly constructed, a certificate of occupancy will need required prior to the application. Also, once the HECM for Purchase has been completed, the borrower has 60 days within which to move in and occupy the home.
Some properties are also disqualified from this type of transaction. These include boarding houses and bed and breakfasts, among others. There are also certain limitations on how borrowers can fund the portion of the cost that is not covered by the HECM for Purchase. For instance, it is not allowed for a person to take out a personal loan or use advances on a credit card to pay for the remainder. These protections are designed with the borrowers’ financial interests in mind.
Learn More HECM for Purchase Details
An HECM for purchase is an important tool for seniors who would like to buy a new home, while minimizing the impact on their monthly net cash flow. That said, there are various additional details and requirements to keep track of, so the best way to proceed is to seek tailored advice from a reverse mortgage professional.
You can request an HECM for purchase quote from Preferred Reverse using our convenient online form, or you can visit our Contact Page to find a reverse mortgage professionals located near you.