Normally, a reverse mortgage converts your home equity into cash that you can use to pay off a mortgage without burdening yourself with monthly payments or risking foreclosure. However, in 2008, the US Federal Housing Administration introduced new legislation HECM (Home Equity Conversion Mortgage) allowing seniors to use a reverse mortgage to buy a new home. HECM for purchases allows seniors to use their loan proceeds from the reverse mortgage to purchase their dream home.
HOW IT WORKS
Nelson is 70 years old. Many friends in his circle moved to a new, low-maintenance lifestyle community. Nelson was excited to join his friends in this community. At the same time, he didn’t want to pay a burdensome monthly mortgage payment or spend $450,000 in cash to purchase the home.
He was compelled to choose a less expensive home.
Thankfully, a friend told him about Reverse Mortgage for Purchase loans. Nelson realized that with this reverse mortgage, he only had to invest about 57% of the buying price. This allowed him to choose a more comfortable lifestyle. He could also keep more of the money from the sale of his old home while having the option of making no monthly principal and interest payments if he so chooses.
Brett Stumm Reverse Mortgage Difference
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