HECM for Purchase - Another reason to love reverse mortgages
By: Movement Team
octubre 25, 2024
The ability to use a reverse mortgage to purchase a home isn’t really a new idea, but many people still don’t know about this fantastic option. The federally backed reverse mortgage, known as a Home Equity Conversion Mortgage (HECM), can also be more versatile than many people realize. In fact, when I speak to older homeowners, financial planners and even real estate professionals, the concept of purchasing a home with one is completely foreign. While I can’t cover all the details in a blog, let’s cover some basics.
It’s not uncommon for a client to say, “My mother wants to move to be closer to her kids and grandkids.” When individuals desire a closer connection to family, sometimes a move is needed.
While family is a primary motivator, physical limitations can also create a need to move. Some will downsize to a more manageable home. Some wish to upsize to a retirement dream home on the beach, golf course or active adult community. Still, others may be trying to navigate the financial challenges of a divorce.
With a HECM for Purchase, Movement Mortgage will provide the same principal limit to the eligible borrower as would be available with a traditional reverse mortgage. However, instead of giving the funds to the borrower, the funds are generally applied to the sales price of the new home. Depending on the age of the youngest participant and the effective interest rate, Movement Mortgage may be able to contribute 30% to 70% of the sales price.
When selling a home and relocating, homeowners may find that this program can allow them to have more cash reserves upon relocation. Many will use the remaining funds to supplement their retirement savings.
HECMs are only offered for a borrower’s “principal residence.” This means that HUD will require the borrower to occupy the home within 60 days. Also, all homeowners will need to complete the required counseling. With a purchase transaction, it’s recommended that this be completed early in the process.
Lastly, make sure both the homebuyer and real estate agent meet with a Movement Mortgage Retirement Mortgage Professional (RMP) to avoid mistakes when writing the purchase and sale agreement.
If you’d like to learn more about reverse mortgages or have any questions about a HECM for Purchase, contact a Movement Mortgage loan officer near you today!
Note: Qualification is required. Additional restrictions apply. Reach out to a retirement mortgage professional for more information. Borrower is required to pay all property charges including, but not limited to, property taxes, insurance and maintenance. This material has not been reviewed, approved, or issued by HUD, FHA, or any government agency."
The Need
It’s not uncommon for a client to say, “My mother wants to move to be closer to her kids and grandkids.” When individuals desire a closer connection to family, sometimes a move is needed.
While family is a primary motivator, physical limitations can also create a need to move. Some will downsize to a more manageable home. Some wish to upsize to a retirement dream home on the beach, golf course or active adult community. Still, others may be trying to navigate the financial challenges of a divorce.
The HECM Contribution
With a HECM for Purchase, Movement Mortgage will provide the same principal limit to the eligible borrower as would be available with a traditional reverse mortgage. However, instead of giving the funds to the borrower, the funds are generally applied to the sales price of the new home. Depending on the age of the youngest participant and the effective interest rate, Movement Mortgage may be able to contribute 30% to 70% of the sales price.
When selling a home and relocating, homeowners may find that this program can allow them to have more cash reserves upon relocation. Many will use the remaining funds to supplement their retirement savings.
The Details
HECMs are only offered for a borrower’s “principal residence.” This means that HUD will require the borrower to occupy the home within 60 days. Also, all homeowners will need to complete the required counseling. With a purchase transaction, it’s recommended that this be completed early in the process.
Lastly, make sure both the homebuyer and real estate agent meet with a Movement Mortgage Retirement Mortgage Professional (RMP) to avoid mistakes when writing the purchase and sale agreement.
If you’d like to learn more about reverse mortgages or have any questions about a HECM for Purchase, contact a Movement Mortgage loan officer near you today!
Note: Qualification is required. Additional restrictions apply. Reach out to a retirement mortgage professional for more information. Borrower is required to pay all property charges including, but not limited to, property taxes, insurance and maintenance. This material has not been reviewed, approved, or issued by HUD, FHA, or any government agency."
