Reverse Mortgage for Purchase Info Archives - Page 8 of 9 - Colorado Reverse Mortgage Specialist

Category: Reverse Mortgage for Purchase Info

A Hidden Gem – Reverse Mortgage for Purchase

Posted on August 5, 2015August 18, 2015 by janjordan

Nearly everyone is familiar with a Reverse Mortgage and many even know someone who has used one to increase cash flow or help them remain in their existing home. But what many people don’t realize is that you can also use one to purchase a home. This little known portion of the reverse mortgage program, called Reverse Mortgage (HECM) for Purchase, is a golden gem to many seniors who are looking to settle down somewhere other than their current home for retirement. Whether looking to move closer to family, purchase a single level home, or move into a senior community, these homebuyers are able to purchase a home they often wouldn’t be able to afford otherwise while still eliminating mortgage payments – all in a single transaction.

To qualify, the borrower(s) must be 62 years or older, be purchasing an eligible property, have the required down payment, and meet the HECM financial assessment guidelines. Eligible property types are single family residences, new construction where certificate of occupancy has been issued, HUD approved condos and townhomes. Allowable down payment sources include cash from savings or investments, proceeds from the sale of an existing home or asset, gifts. Funds that are borrowed such as a loan or credit cards are not allowed as a funding source. The amount of the down payment varies depending on the age of the youngest borrowers and the cost of the new home.

Working with an educated real estate agent and reverse mortgage specialist will expedite the process, and in most cases in a Reverse Mortgage for Purchase does not take longer to complete than a typical home purchase with a traditional loan.

Jan Jordan is a Reverse Mortgage Specialist serving the Fort Collins, Loveland, Greeley, Longmont, Boulder and other Front Range areas of Colorado, as well as the Cheyenne and Laramie communities of Wyoming. Contact Jan and learn if reverse mortgage is right for you.

Reverse Mortgage for Purchase : A Crash Course

Posted on September 23, 2014 by janjordan

Reverse Mortgages, once typically thought to only help struggling seniors, have undergone enormous changes recently and are being used to help even affluent retirees achieve their retirement dreams and homebuyers purchase new homes.

The Reverse Mortgage for Purchase program is quickly gaining in popularity. This program allows seniors to purchase a home using a reverse mortgage and live mortgage payment free. To qualify for this program, borrower(s) simply need to be age 62 or older, be purchasing a home to become their primary residence, and have their “required investment”. There are no income or credit requirements and just like with any other type of home loan, the borrower will still be the homeowner and will always retain the title. In addition, similar to a homeowner who owns their home free and clear, there will not be a monthly mortgage payment but the borrower will still be required to pay property taxes, homeowner’s insurance, HOA fees, and basic upkeep and utility payments.

The borrower can use this loan to purchase single family homes, town homes, and FHA approved condos. Unfortunately, these loans cannot be used to purchase homes under construction and the home must have a “Certificate of Occupancy” issued prior to starting the application process.

As mentioned above, the borrower will need to have their “required investment” or down payment. This amount is determined by a calculation set by HUD based on: the lesser of the sale price or appraised value, the age of the youngest of the borrowers, and the current expected interest rate. There are many examples available of these numbers to help real estate professionals and borrowers determine the price bracket they should search based on the required investment they have available.

Unlike a traditional mortgage where the loan reaches a “maturity date”, reverse mortgages have a “maturity event”. This is the event which causes the loan to become due and payable. These “events” include: the last remaining borrower passes away, the homeowner sells the home, the last remaining borrower leaves the home for 12 consecutive months, or the homeowner defaults on property taxes or insurance.

Prior to being approved for a reverse mortgage, HUD’s Federal Housing Administration (FHA) requires each borrow to participate in a counseling session with an approved agency. These not-for-profit agencies are funded by the federal government and work closely with both the FHA and lenders to ensure a smooth process. The goal of this session is not to steer a potential borrower in one direction or another, but to make sure they clearly understand all aspects of a reverse mortgage.

Jan Jordan is a Reverse Mortgage Specialist serving the Fort Collins, Loveland, Longmont, Greeley, and Front Range areas of Colorado as well as Cheyenne and Laramie, Wyoming. Click here to contact Jan and learn if reverse mortgage is right for you.

Reverse Mortgage for Purchase – from a Client’s Perspective

Posted on September 15, 2014June 29, 2015 by janjordan

This first hand account of how the decision to go with a Reverse Mortgage for Purchase instead of paying cash for a home changed the course of life for these homeowners is really impressive. I absolutely LOVE hearing stories like this!

Reverse Mortgage for Purchase (aka HECM for Purchase) is available to seniors 62 and over. Borrowers are required to meet the same age guidelines as with a traditional reverse mortgage, but instead of using the equity from an already existing home they own, they contribute a down payment towards the cost of a new home and the reverse mortgage lender makes up the remainder of the cost – leaving the borrower with NO mortgage payment. The amount of the down payment is calculated a couple different ways and changes based on the age of the homeowner and the value of the home (click here to learn more about down payments).

We bought our house with a reverse mortgage in 2010. We put down $115K, received as inheritance from my husband’s mother, which could have bought us a 2 BR 1 bath 900 sf on a tiny lot with no mortgage. Instead we have 5 acres, 1850 sf 3 BR 2 bath home, a barn for my 2 horses (which boarding would have been costing us $600 a month at least), 12 x 24 greenhouse, two storage buildings, a workshop, and a pool in an equestrian neighborhood that is peaceful and quiet with no barking dogs, roaring cars, or loud trashy neighbors. The Reverse Mortgage for Purchase gave us the ability to purchase a much nicer home and still live mortgage payment free.

We pay property taxes, insurance, and upkeep. We do not “co-own” the house with the mortgage company as many believe is the case with a reverse mortgage. It is in our names and we can sell it if we decide to do so. The reverse mortgage is treated just like any other mortgage at the time of sale. It’s paid off at closing and the equity goes straight into our pockets. And we do have equity…in fact, since real estate has rebounded, particularly in our equestrian community, we have more equity than when we bought the house even after having the RM for four years.

We have nobody to leave the property to. My husband’s children disappeared out of our lives years ago and I have no kids. We’ve left everything in the hands of our lawyer to be sold and the funds split between two animal charities. If we had offspring we wanted to leave anything to, they would have time to decide what to do with the house – either refinance it and pay off the mortgage, sell it and take any equity, or another option.

~ Happy with Horses

Here are few basics to the reverse mortgage for purchase program:

The purchaser must be age 62 or older (each borrower on title must meet this criteria, although others residing in home do not)
The home being purchased must be the new primary residence
The purchaser must have the “required investment” (down payment) from a HUD allowable source. The funds cannot be borrowed. The required investment can come from the sale of a currently owned asset or money you have had for at least 90 days.
Eligible properties include: single family homes, town homes, and FHA approved condos. A loan can not be applied for on a new construction home until it has a it’s “Certificate of Occupancy”.

Should Seniors Buying a Home Use A Reverse Mortgage for Purchase?

Posted on September 9, 2014September 9, 2014 by janjordan

Seniors typically want to be homeowners, often purchasing a new home during their retirement years – some for the very first time. The reasons they are looking to purchase varies, ranging from downsizing, eliminating burdensome stairs or extensive grounds upkeep, moving closer to family, or possibly purchasing their dream home in a different climate. Whatever the reason may be, using a reverse mortgage to make the purchase is an option that should not be overlooked.

Prior to congress approving the Reverse Mortgage for Purchase (HECM for Purchase) program, homeowners that wanted to purchase a new home and obtain a reverse mortgage needed to do so through two separate transactions. The downside of this is obvious. First, when taking out a conventional mortgage, potential borrowers are held to the high income and credit standards of traditional mortgage lenders. And second, the borrower is subject to closings costs from both loans. Since the initiation of the Reverse Mortgage for Purchase program, seniors wishing to buy a new home and obtain a reverse mortgage are no longer subject to overwhelming standards. With a Reverse Mortgage for Purchase, income and credit are irrelevant, and all the fees are wrapped into one transaction.

Some seniors are cash rich when buying a home, so the question arises why not wait to take out a reverse mortgage? Why do it when purchasing? When using the Reverse Mortgage for Purchase a downpayment is required – but for cash rich borrowers, this means they have the opportunity to use their cash as a down payment and potentially purchase a home in a higher price range than they were originally planning AND still live mortgage payment free. Or, on the other hand, if they don’t wish to shop in a higher price bracket, they can keep some of their cash since the reverse mortgage will cover a portion of the cost of the home. The other major consideration is variable interest rates in the future, as higher rates will reduce the amount a senior can draw on a reverse mortgage. Waiting can be a risky strategy if reverse mortgage is something being considered for the future.

Senior borrowers, 62 and over, can use a reverse mortgage for purchase to buy single family homes, town homes, and FHA approved condos as long as it has a certificate of occupancy. The home being purchased will need to be the buyer’s primary residence. The required down payment will need to come from a HUD approved source. And the borrower will be the owner of the home – just like with a conventional mortgage. Click here to learn more about the details of Reverse Mortgage for Purchase.

Baby Boomers Have Largest Home Equity, Study Finds

Posted on August 28, 2014 by janjordan

Although Zillow’s Negative Equity Report for the second quarter of 2014 may have some negative numbers (for instance there are more than 8.7 million homeowners with a mortgage still remaining underwater), there are a few highlights to mention.

First, while approximately 18.7 percent of Generation X homeowners are underwater on their mortgage only 10.9 percent of Baby Boomers are underwater. In addition, the national negative equity rate continued to decline falling to 17%, down an incredible 14.4 percentage points from it’s peak in 2012. Negative equity has fallen for nine consecutive quarters as home values have risen. This number is expected to fall to 14.9% within the next year.

For baby boomers looking to incorporate a reverse mortgage into their retirement strategy this is very positive news. As retirement planners are working with seniors to develop long term plans to help ensure retirees do not run out of money during their often decades long retirement years, a reverse mortgage line of credit is being considered as a part of the strategy. Since retirees can not only use a reverse mortgage as a line of credit, but also live mortgage payment free, it’s a fantastic option when utilized in a timely and appropriate fashion.

On the other hand, for baby boomers looking to relocate, downsize, or purchase their dream home once they hit retirement, a reverse mortgage for purchase is a very viable option. And with lower negative equity rates across the nation, it is easier to make transitions like this. Not only do the positive housing numbers point to faster sells, but also with nearly 90% of baby boomers having neutral or positive equity in their homes, it means increasingly larger down payments if they are wishing to use all or some of those funds for a reverse mortgage for purchase.

Traditional Reverse Mortgages and Reverse Mortgage for Purchase are available to seniors 62 and over regardless of income or credit. The funds can be received via fixed monthly payments, a one-time lump sum payment, a line of credit – (or a combination of the above), or the purchase option. There are no limitations as to how the borrower can spend the funds. And with retirees living more active and adventurous lives, the more creative, the better!

Why Reverse Mortgage for Purchase is Different

Posted on June 17, 2014June 17, 2014 by janjordan

The Reverse Mortgage for Purchase program is an age-based mortgage insured by the FHA for folks aged 62 and older. Unlike a traditional mortgage, monthly payments are deferred and the loan balance increases over time. Because the loan is backed by the FHA, neither the borrower(s) nor their heirs are personally liable for the debt. There are also no credit or income requirements.

So what does all that really mean?

It’s actually very simple…let’s say you use a reverse mortgage to purchase your dream home and decide to move in 10 years. When you sell your home you will receive 100% of the net proceeds after paying off the loan balance at the time of the sale. This is exactly how a traditional mortgage works.

The primary benefit of using a reverse mortgage for purchase comes into play during your living years in the fact that you are not paying a monthly payment to the mortgage company, thereby increasing your monthly cash flow. The secondary benefit is for your heirs. What if at the time of your passing your loan balance is greater than the value of your home — what happens?

In a traditional mortgage scenario your heirs would be forced to sell the home at a loss and cover the difference. The terms of a HECM program mandates that neither you nor your heirs are personally liable to cover the difference if your home is sold for a loss. Simply put, it’s not your problem and no one is coming after your estate for a settlement.

Click here for more specific details on how the Reverse Mortgage for Purchase program works.

(Information courtesy of Security 1 Lending).

Reverse Mortgage for Purchase Down Payment Information

Posted on April 1, 2014August 21, 2017 by janjordan

Reverse mortgage for purchase is a popular option for seniors wishing to purchase a home and live mortgage payment free, just as they would with a traditional reverse mortgage. This program has been a wonderful tool used by homeowners in Northern Colorado, including Longmont, Fort Collins, Loveland and Greeley.

Here are few basics to the reverse mortgage for purchase program:

The purchaser must be age 62 or older (each borrower on title must meet this criteria, although others residing in home do not)
The home being purchased must be the new primary residence
Credit and income are irrelevant
The purchaser must have the “required investment” (down payment) from a HUD allowable source. The funds cannot be borrowed. The required investment can come from the sale of a currently owned asset or money you have had for at least 90 days.

For more detailed information about reverse mortgage for purchase, click here.

The required investment (or down payment) changes based on the age of the homeowner and the value of the home they are purchasing. The following table is an illustrative guide to required down payments.

Strong Home Sales Highlight Reverse Mortgage for Purchase

Posted on February 5, 2014June 17, 2014 by janjordan

As existing home sales rose in December of 2013, the year ended with the strongest sales since 2006, as reported by Realtor.org report. This is great news according to Lawrence Yun, NAR chief economist, who said housing has experienced a strong and encouraging recovery over the past two years.

“Existing-home sales have risen nearly 20 percent since 2011, with job growth, record low mortgage interest rates and a large pent-up demand driving the market,” Yun said. “We lost some momentum toward the end of 2013 from disappointing job growth and limited inventory, but we ended with a year that was close to normal given the size of our population.”

The national median existing-home price for all of 2013 was $197,100, which is 11.5 percent above the 2012 median of $176,800.

What does this mean for reverse mortgages? Well, it may mean it’s the perfect time to consider a reverse mortgage for purchase. Here’s how the program works:

For seniors 62 and over, with minimal credit and income requirements, home buyers are able to use reverse mortgage to purchase a new home. The amount of the down payment required from the buyer will depend on the amount of the home they are purchasing. But unlike a conventional loan, not only will the lender provide the funds to make up the difference between the home price and the down payment, the new home owners will also be able to live mortgage payment free for as long as they remain in the home.

There are two scenarios that may signal the time is right for you to consider a reverse mortgage for purchase. Such as:

Possibly you’re looking to sell your existing home and move to a community or house that better fits your needs? With the strength in the housing market and thinning inventory, this could be a great time to consider selling your current home. And with a reverse mortgage for purchase, there are options that allow you to purchase while the current home is still for sale.

And of course, if purchasing a new home is your only goal, jumping in as a buyer before the market becomes overly competitive and home prices rise, usually proves to be beneficial. And not only will the reverse mortgage supplement the existing proceeds when making the purchase, it can also mean the buyer will not need to drain all of their funds, freeing income up for other things – such as medical bills, in home care, or even vacations.

Jan Jordan is a Reverse Mortgage Specialist serving the Fort Collins, Loveland, Greeley, and Front Range areas of Colorado. Click here to contact Jan and learn if reverse mortgage is right for you.

Reverse Mortgage and the Housing Supply

Posted on November 18, 2013June 17, 2014 by janjordan

With the baby boomer generation coming of age, we’re seeing a noticeable shift in how seniors exist in today’s society. No longer are the days of nursing homes and wheelchairs, or moving in with adult children. Many of today’s seniors are more independent than ever before, outliving the elderly of yesterday by leaps and bounds. But this trend is creating a new scenario across the United States – demand for independent, affordable, and accessible housing. According to the Census Bureau stats, the population of Americans over age 65 increased by about five million between 2000 and 2010 and over the next 20 years, the aging of the Baby Boom generation will cause the senior population to grow by 30 million!

Although many face challenges to some degree, most elderly Americans want to remain in their home. Those who feel the need to move, still prefer to remain in an independent residence, usually just closer to family or without stairs. And senior housing communities are gaining in popularity for socially active retirees who thrive in a community situation. The options are vast – and will continue to expand as the demographic does.

Reverse mortgage is an accessible and viable option for many of these seniors aged 62 and older, and with minimal income and credit requirements. A reverse mortgage can be used to stay in a current home throughout the aging years while living mortgage payment free – OR – can be used to purchase a new home and still live mortgage payment free. As seniors take control of their housing situation and become more proactive about their futures, they will find an opportunity exists to ensure a financially stable future, while maintaining their independence, health, and dignity.

To learn more about obtaining a reverse mortgage on your current home, click here. And to learn about using a reverse mortgage to purchase a new home, click here.

Jan Jordan is a Reverse Mortgage Specialist serving the Fort Collins, Loveland, Greeley, and Front Range areas of Colorado as well as Cheyenne and Laramie, Wyoming.

Reverse Mortgage Boosts Cash Home Buyers

Posted on November 3, 2013June 17, 2014 by janjordan

In this day and age, buying a home with cash is rare. And not because of the reasons you may think – such as who has that much cash nowadays? Well, that is part of the reason, but it’s a little more complicated than that. Those who have a substantial amount of cash are finding there are no homes available in their price range and suddenly they don’t have enough cash to be a true “cash buyer”. This diminishes their hopes of living mortgage payment free. For example, if a retired couple sells their home or allots other funds amounting to $170,000 for a new home, they will suddenly be facing a new dilemma – finding a home to meet their needs, that doesn’t need repairs, and is in the community they wish to live. With home prices quickly recovering in the Loveland and Fort Collins area, this scenario is playing out ever more often.

This is where the Reverse Mortgage for Purchase program can provide a solution. Not only will the program add funds to the buyer’s available cash making up the difference needed to purchase an appropriate home, it will also allow that buyer to live mortgage payment free.

Here’s how it works:

Click here to learn more about the Reverse Mortgage for Purchase program (aka HECM for Purhcase).

Jan Jordan is a Reverse Mortgage Specialist serving the Fort Collins, Loveland, Greeley, and Front Range areas of Colorado as well as Cheyenne and Laramie, Wyoming.