HECM FOR PURCHASE
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WHAT IS hecm fOR purchase?
HECM for Purchase, also referred to as a Home Equity Conversion Mortgage for Purchase, is a government-insured loan that enables eligible borrowers to purchase a new home by utilizing reverse mortgage loan proceeds*. This unique financial solution allows homeowners to leverage the equity in their current home to acquire a new property in a single transaction, simplifying loan costs and eliminating the need for monthly mortgage payments* all in one transaction. HECM for Purchase empowers eligible borrowers to increase their buying power via reverse mortgage loan proceeds, move closer to family, transition to a senior community, right-size their living arrangements, and potentially even eliminate monthly mortgage payments*, all while preserving their retirement assets.
To qualify, borrowers must be at least 62 years old, with the exception that one non-borrowing spouse may be younger than age 62. Borrowers must also own the property that will be the subject of the HECM for Purchase transaction, and reside in that home as their primary residence. Additionally, to ensure the implications and obligations of the loan are fully understood, borrowers must complete reverse mortgage counseling through a HUD-approved agency. Lastly, borrowers should have sufficient funds available for the new home’s down payment and to meet the specific terms of their reverse mortgage loan.
HECM for Purchase offers a multitude of benefits to homeowners aged 62 and older who aspire to purchase a new home. The program provides the flexibility to relocate, down or upsize, and increase their buying power through reverse mortgage loan proceeds*. Moreover, eligible borrowers who choose to eliminate their monthly mortgage payments enhance their financial security and peace of mind. Interested in learning more about HECM for Purchase? Our Reverse Mortgage Professionals, guide you through the process and provide you with the information you need to make an informed decision.
*Borrower(s) must reside in-home as their primary residence. The property taxes, insurance(s), homeowner’s association fees (if applicable) must remain current and upkeep must be maintained. Repayment is not required until the last remaining borrower (or eligible, non-borrowing spouse) no longer resides in the home. Reverse mortgage is a mortgage loan and proceeds are not considered income. Consult your financial advisor.
What types of Homes Are Eligible?
Single Family Residence
Must be the Owner’s Primary place of Residency.
Multiunit housing
Duplexes, Triplexes, etc. Owner Must Reside in One of the Units
Manufactured Homes
HUD Approved and Built after June 15, 1976. Must be primary residence.
Condominiums
Require FHA Approval. Must be owner’s primary residence.
Why should you consider HECM For Purchase?
If you’re looking for a way to purchase a new home without having to worry about monthly mortgage payments, then HECM for Purchase may be right for you. With a reverse mortgage, you can use the equity from your current home to make a down payment on a new home, and then live in the new home mortgage-free for as long as you want.
Here are some of the benefits of using a HECM for Purchase:
- Easier Qualification Process: With a reverse mortgage, the qualification process is typically easier compared to a traditional mortgage. This is because the primary factor that determines eligibility is the value of the home.
- Make Monthly Payments or Don’t – You Choose: With a reverse mortgage, you can choose whether to make monthly payments or not, providing greater financial flexibility.*
- Buy the Home of Your Dreams with Increased Purchasing Power: Since you don’t have to make monthly mortgage payments, you may be able to afford a more expensive home than you would with a traditional mortgage.
- Loan Options: With a reverse mortgage, you can choose between a fixed rate or an adjustable rate mortgage, giving you more control over your loan.
- Retirement Planning: By using a reverse mortgage to purchase a home, you can help secure your retirement by freeing up cash flow and eliminating monthly mortgage payments. This can allow you to focus on enjoying your retirement without worrying about financial stress.
- Homeownership Benefits: By owning your own home, you can enjoy the benefits of homeownership, including tax benefits, increased stability, and the ability to build wealth through home equity.
- Eligible Spouse Can Remain in the Home if the Primary Borrower Passes-On: If you have a younger spouse, they may be able to remain in the home if the primary borrower passes away, provided they meet certain criteria.
- Manageable Cash Down Payments at About 50%: With a reverse mortgage, the cash down payment required is typically around 50%, with the HECM program covering the rest.**
- Non-Recourse Loan: A reverse mortgage is a non-recourse loan, which means that the balance of the loan will never exceed the appraised value of the home. This provides greater financial security to the borrower.
- Borrower Retains Title: With a reverse mortgage, the borrower retains the title to the home, not the lender.
- Lender Cannot Freeze Line of Credit: A built-in safety feature of a reverse mortgage is that the lender cannot freeze the line of credit, which is not offered with any other product.
*Borrower(s) must reside in-home as their primary residence. The property taxes, insurance(s), homeowner’s association fees (if applicable) must remain current and upkeep must be maintained. Repayment is not required until the last remaining borrower (or eligible, non-borrowing spouse) no longer resides in the home. Reverse mortgage is a mortgage loan and proceeds are not considered income. Consult your financial advisor.
**LTV About 50% for 80-Year-Old (Higher for Older Borrowers, Lower for Younger Borrowers)
If you’re interested in purchasing a home using a reverse mortgage, now is the time to get your quote. Using a reverse mortgage can offer you financial flexibility and security during your retirement years. Don’t wait to see if it’s the right choice for you – get your quote today and make an informed decision about your future home.
HECM for Purchase Process
- Meet the Eligibility Requirements: To be eligible for a HECM for purchase, you must be 62 years of age or older and have sufficient equity in your current home or a significant down payment to purchase the new home.
- Attend Mandatory Counseling: You must complete a mandatory counseling session with an approved housing counselor who will provide you with detailed information about HECM loans and their features, benefits, and costs.
- Get Pre-Qualified: Complete our pre-qualifying application on the right-hand side of the screen. PRMG will then review this information and contact you to collect further information about your income, assets, debts, and credit history to determine if you meet the financial requirements for the loan. If you do, you will receive a pre-approval letter.
- Find a Suitable Home: You can use the pre-approval letter to start shopping for a suitable home. The property must meet FHA guidelines and be your primary residence.
- Finalize the Loan: Once you have found a home, we will process your loan application and order an appraisal of the property. If the appraisal comes back satisfactory, you can proceed with the loan closing.
- Move In and Enjoy Your New Home: Once the loan is closed, you can move into your new home and enjoy the benefits of the HECM for purchase loan.
Remember, the HECM for Purchase Loan is different from a traditional mortgage and therefore has different terms and conditions. If you have any questions or concerns, feel free to contact one of PRMG’s Reverse Mortgage Professionals, who can guide you through the process.