Seniors use reverse mortgages to access the equity of their home, but with reverse for purchase, FHA now allows seniors to use this loan for a home they do not own yet. Let’s learn to use a reverse for purchase to buy your next home!
Learn How to Pay for Long-Term Care by Using Reverse for Purchase
What is Reverse for Purchase?
The Home Equity Conversion Mortgage (HECM) is a type of reverse mortgage that is insured by the Federal Housing Administration (FHA). This allows you to purchase a new home using the reverse mortgage loan process, eliminating mortgage payments for the new home. Reverse for purchase has no income limitations or medical requirements. This can be a great option for seniors who want a new home that may meet their physical needs, want to move closer to family, or just downsize. In many cases, a reverse for purchase can enable seniors to purchase a higher valued home. The remaining portion of the sale price of your home can help with the down payment. Other ways to fund the down payment is through savings or gifts from family members.
Reverse for Purchase vs Reverse Mortgage
All reverse for purchase loans are reverse mortgages, however not all reverse mortgages are reverse for purchase. Reverse purchases are reverse mortgages that are backed by the FHA and issued by an FHA-approved lender. Unlike the traditional reverse mortgage, which is refinancing a portion of the home equity, reverse for purchase pays a portion of the sales price of the new home.
Who is Eligible?
To obtain approval for a reverse for purchase, you must meet all of the requirements set by the FHA, which includes:
-Must be at least 62 years or older
- Must own the property
- Property must be your primary residence
- Property must pass the FHA appraisal inspection
- Not be delinquent on any federal debt
- Have the financial capability to continue to pay ongoing payments including
- Property tax
- Insurance
- Homeowner association fees
- The property must be a single-family home or a two-to-four-unit home with one unit occupied by the borrower
- An FHA approve condominium
Reverse for purchase makes the home buying process for seniors faster and easier while at the same time reducing costs associated with buying a new home. If you want to learn more about reverse for purchase, please contact PCL Financial today.
