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    HECM for Purchase

    How to use a Reverse Mortgage to Purchase

    A reverse mortgage, or a HECM (Home Equity Conversion Mortgage), is a way to turn the equity in your home into tax free cash without having to make any monthly mortgage payments. Instead of monthly payments, the loan is repaid in one lump sum when the last borrower leaves the home. Already used by more than half a million households across the United States, the borrower is required to continue paying property taxes and insurance and maintain the home. The reverse mortgage is a government insured loan that enables seniors to gain financial independence from their ever increasing living expenses.

    How does that help me to purchase a new home?

    In 2006, the Federal Housing Administration (FHA) created the HECM for Purchase (H4P) loan. This innovative loan program was designed to help seniors purchase a new primary residence using a reverse mortgage – all within a single transaction.

    How does it work?

    Very simply, the HECM for Purchase replaces a traditional mortgage to finance the new home. A down payment is combined with the HECM for Purchase loan proceeds to purchase the home. The down payment is usually obtained from the sale of your current home, or from other savings or assets.

    How much could I qualify for?

    The loan amount is based on the age of the youngest borrower, prevailing interest rates, and the value of the home you wish to purchase.

    How do I qualify?

    Qualifications for a HECM for Purchase reverse mortgage are based on these important factors:

    • At least one borrower must be 62 years old or older
    • Your new home must be your primary residence
    • You must have a sufficient down payment to purchase the new home
    • You must maintain the home and pay property taxes and insurance

    HECM for Purchase Benefits

    • No monthly mortgage payments
    • Loan proceeds are tax free (always consult your financial adviser)
    • No prepayment penalty
    • Credit requirements tailored to seniors – no credit score requirement, though there is a
      financial assessment
    • Increased discretionary cash
    • No one owns the home but you
    • You can sell the home at any time

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