I’m often asked if you can buy a home with a reverse mortgage
Many seniors take out a reverse mortgage to help them stay in their existing home, but you can also use a reverse mortgage to finance a new home.
There are many reasons to do this. One of the most common reasons is to move closer to family and a support network, as you age. Another common reason is to move from a two-story home or condo to a one-story home without stairs, for mobility reasons.
So what, exactly, is a a reverse mortgage? A reverse mortgage is a Home Equity Conversion Mortgage or HECM, backed by a HUD government insurance plan that protects you, your heirs and the lender, in the event that your mortgage balance eventually exceeds your value.
The next question I’m asked is, “How is the loan repaid?” When the last remaining borrower moves out, the home is sold. The loan is then repaid (including interest and any fees) and the equity that is left over goes to your heirs. If your heirs choose to keep the house, because it’s gone up in value, or for other reasons, they may do so by paying off the loan.
Below are some of the BENEFITS of a reverse mortgage.
* You receive tax-free cash (consult with your tax professional for details).
* You can do whatever you want with the money.
* You still own your home and it’s still in your name, not the banks, and you can live there as long as you like.
* You will have no monthly mortgage payments (Homeowners must continue to pay insurance, taxes and maintain the property and comply with the loan terms).
* You can pay off and eliminate your existing mortgage.
Below is a list of REQUIREMENTS of a reverse mortgages:
* You must be 62 or older.
* You must own your home and occupy it as a primary residence.
* You must attend a HECM counseling session prior to receiving a HECM loan.
* Proof of income and credit scores are not required. A reverse mortgage is based on the equity in your home.
* Your home must be FHA approved.
* Qualification is based on the youngest borrower on title.
Finally, how much does it cost to get a reverse mortgage?
In general, your costs will be the same as they would be if you were getting a traditional mortgage, which would include escrow fees, title fees , appraisal fees and mortgage insurance premium or MIP.
There are many reverse mortgage companies to choose from. Before deciding on a reverse mortgage, consult with your tax professional and or real estate attorney for details and advice.
Please contact me if you are planning to use a reverse mortgage to purchase a home. I would be happy to help you find your 55+ dream home, at a dream price.
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