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Reverse Mortgage To Purchase A Home
Reverse Mortgage to Purchase is an entirely new type of mortgage financing.
Many older people might want to buy a home more suitable to their retirement years but do not want a monthly payment. With a reverse mortgage to purchase there is No monthly repayment, EVER.
Most buyers of homes in retirement are all cash buyers. But with a reverse mortgage for purchase they do not have to spend all their cash. Or they can use a reverse mortgage to purchase when they don’t have enough cash to complete the purchase or they want to buy a more expensive home than they qualify for.
Many seniors cannot get approved, or are afraid that they can’t get approved, for a standard forward purchase loan. With a reverse mortgage for purchase it’s much easier to be approved. No minimum credit score is required, No employment is required, No underwriting ratios are required for approval.
Reverse mortgage for purchase is an FHA loan. It is NOT a sub-prime, non-conforming or Non-QM loan. Reverse mortgage to purchase opens a new, rich vein of clients for you. And over 1.4 million Seniors move each and every year.
At a minimum, by studying this material you will be ready when a customer asks you “Do you know anything about using a reverse mortgage TO BUY a home? I heard there is no monthly payment due on the loan and it’s easier to qualify.”
Realtors-Reverse Mortgage For Purchase” Will Bring You $$$ Every time you speak to someone 62 or older think how reverse mortgage to purchase provides a housing solution for them. Accurate knowledge of reverse mortgage to purchase is practically unknown and with it you will position yourself as a real estate expert, trusted advisor and increase your sales.
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Using The HECM Reverse Mortgage Loan TO Purchase A Home
Most homeowners 62 and older use the HECM to access the equity they have in the homes they now occupy. But those 62 and older can also use a HECM loan to Purchase a home more suitable to their retirement years. And as with all HECM loans there is no monthly repayment on a HECM for Purchase.
Perhaps they wish to buy that “dream” home or even afford their first home. Perhaps they want a different home but do not want a mortgage payment at this stage in their life, or, they want a smaller home, a ranch with no stairs, a condo, a home closer to the grandkids, a home in a resort community or warmer climate.
Most buyers of homes in retirement are all cash buyers. But with a reverse mortgage they do not have to spend all their cash. Or, perhaps, for a myriad of reasons they cannot be approved for a purchase loan. Most of those reasons for denial of a purchase loan do not apply in HECM lending. A minimum credit score, underwriting ratios such a debt to income, payment to debt, loan to value, continuing and stable income sufficient to support a payment and 2 year employment history are NOT required in obtaining approval for the reverse mortgage to purchase.
Using a HECM to Purchase borrowers would reverse mortgage the new home for the closing, take up to all available reverse mortgage funds at close, bring the difference as cash and have no mortgage payment. After closing there is no repayment of any amount due back on the reverse mortgage to Purchase until the LAST of the home owners move away, or pass away or stay out of the home a continuous year.
There is no monthly repayment on a HECM for Purchase. The borrowers do have to pass the financial assessment used in HECM underwriting to make sure they can afford to remain in the home after closing and they do have to pay the property taxes and insurance due, property maintenance property & condo association dues, if any.
Here is an example, an example only. Call Mister Reverse Mortgage for an updated quote. An older couple, youngest age 70, wants TO BUY a $250,000 property. Age 70, 250K property. The available reverse mortgage funds would be $144,000, (as of 03/02/2015 with a fixed interest rate of 5.06% with the total expected rate 6.31%., or, (an adjustable interest rate with a margin of 2.5% plus the one month LIBOR of .172% for a total initial rate of 2.672% with the expected rate of 5.21%)
Following HECM disbursement restrictions the buyers at this point would have a choice. They could take all available funding for closing by paying with cash or financing into the loan the upfront MIP of 2.5%, $6,250. Or, the borrowers could borrow 60% or less of the available funds at close for a much reduced MIP of .005% or $1,500.
Using an example, As an example only, where all available funding is applied at closing, with a fixed interest rate the closing costs would be $8,565, (as there is no origination fee with a fixed rate loan at this time) , with an adjustable interest rate, the 3 categories of closing costs, all financed, are $12,565 (Origination of $4,000 Mister Reverse Mortgage’s maximum and a $500 savings from other lenders, $6,250 Upfront MIP and $2,315 closing costs. If they would take 60% or less of available reverse mortgage funding at close, the MIP would be .005% or $1,250 and the borrowers would bring more cash to close). As an example with the adjustable rate loan, if they would borrow all the available reverse mortgage funds of $131,435, (this is excluding the financed closing costs of $12,565 of an adjustable ) they would have to bring the difference, $118,535, as lump sum cash to closing and then they would HAVE NO MORTGAGE PAYMENT (purchase price minus available reverse mortgage money= funds due at closing. $250,000-$131,435 reverse mortgage funds =$118,565 cash due from buyer at close). Their loan balance at close would be $144,000, $131,435 cash received and $12,565 closing cots paid.
With a reverse mortgage to purchase the buyer does need a large down payment. But think of the age of these borrowers. The money due at closing can come from any other source such as walk away money from the sale of the family home, a retirement distribution, (401K, IRA’s, lump sum pension distribution, etc.) a gift, or inheritance but it cannot come from a lien on the subject property.
Points for realtors. If newly built, the home must have a certificate of occupancy before application and must be occupied within 60 days of closing. The POA can not be used with a HECM to Purchase. No sales concessions are allowed in the contract of a HECM For Purchase. And the FHA forms “Amendment to Sales Contract” and “Real Estate Certification”, standard forms to all FHA loans, must be executed at same time as sales contract. If a condo is involved it must be located in an FHA approved condominium complex.
Mister Reverse Mortgage™
Mister Reverse Mortgage, “LLC”,
Reverse Mortgage Lending Since 1993
Cincinnati Phone (513) 235-8582
PO Box 1, 411 Terrace Place, Terrace Park, OH 45174
Equal Opportunity Lender
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This material is not from HUD or the FHA and has not been approved by HUD or any government agency. Reverse mortgages are neither endorsed nor approved by the Federal Government. The FHA (Federal Housing Administration) provides certain insurance benefits for lenders and borrowers in connection with the lender’s HECM loans. The FHA does not make or originate loans. Reverse mortgages can be a first mortgage or a first and second mortgage loan according to loan type. All loans are subject to credit and property approval. programs, rates, terms and conditions are subject to change without notice. A reverse mortgage is a negative amortization loan which increases the principal mortgage loan amount and decreases the home equity. Borrowers are responsible for paying property insurance and taxes, condo dues if any and property maintenance as they become due. and which may be substantial. The HECM reverse mortgage is a loan that will have to be repaid according to the loan documents. It is a loan with fees, compounding interest and repayment terms. It is strongly advised that borrowers consult with your family and/or trusted financial planners when considering a reverse mortgage loan.