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When it comes to reverse mortgages, they’re often talked about as a tool to help homeowners remain in the homes they have long lived in. Most mainstream advertisements focus on this benefit to senior borrowers. “Use your home to stay at home,” is an often-heard tagline. But did you know you can also buy a new house with a reverse mortgage?
A reverse mortgage for purchase, or Home Equity Conversion Mortgage (HECM) for Purchase, is a special type of reverse mortgage that lets borrowers take out a reverse mortgage and buy a new home within a single transaction.
Does your family live far away? Or is your home requiring too much maintenance for you in your current health? This loan was introduced by the Department of Housing and Urban Development in 2008 as a way for qualifying seniors to enjoy the benefits of a reverse mortgage, while enabling them to move closer to family or purchase a home that is more suitable for aging.
Many households have weighed the pros and cons of using a forward mortgage in order to relocate versus the pros and cons of a reverse mortgage, finding that the reverse mortgage can help achieve their goals more readily.
How to qualify
As with all reverse mortgages, the borrower must be at least 62 years old and must own the home free and clear or have a substantial amount of home equity relative to any mortgage on the property.
As of April 2015, borrowers must also undergo a financial assessment that looks into credit and income as well as debt history and other financial factors. They must also attend reverse mortgage counseling before completing a loan application.
Borrowers are required to continue upkeep of the home to Federal Housing Administration standards, and must also remain current on homeowners insurance and property tax payments.
If you are interested in using a reverse mortgage to purchase a new home, contact us to learn more and to find out how you can qualify.