With a Reverse Mortgage purchase loan, you may get the best of both worlds. Not have to pay all cash, and not have a monthly payment. If needed, you can also take advantage of the limited credit and income requirements for qualification.
By downsizing and using a Reverse Mortgage for the new purchase, many borrowers then have extra cash leftover from the sale of their home allowing them to increase retirement savings and not have a monthly payment at the same time.
Purchase a Dream Home with No Mortgage Payments
On the flip side of downsizing, a Reverse Mortgage may even allow you to buy that more expensive property you have always dreamt of while still not having a monthly mortgage payment. You may be wondering, how is this possible?
A Reverse Mortgage requires you to have a certain percentage of equity in a property to qualify for the program. All you need to know is the exact amount of cash needed from you to qualify for the Reverse Mortgage and home purchase, then you should be good to go. The amount you may have to put down on the new purchase could be anywhere from 50% – 65%, but it may be a lot better than having to pay 100% of the purchase price with cash.
But I Hear Reverse Mortgages Are Bad!
It is true, Reverse Mortgages used to be bad, but they are now heavily regulated and there are a lot of protections for the borrower and homeowner.
Some people think that the lender owns the home, this is not true and you are still the registered owner just like on a traditional mortgage. You retain full title, ownership, and you may sell your home at any time to pay back the mortgage.
Another concern we hear is that heirs or children will be stuck with the loan. Just like any traditional mortgage, any equity belongs to the owner. The kids or heirs are able to sell the home, or just pay off the loan in full with cash or a traditional mortgage if they want to keep it.
Some people think that only low-income seniors can qualify, or that this program is not for everyone. This is not true and anyone who has the equity and follows the other qualification rules can take full advantage. There are many strategic ways this program is very helpful for anyone over the age of 62, and it can be a key part of retirement planning.
The last common concern is that, if a homeowner ends up owing more than the home is worth then the bank will take the house. The standard Reverse Mortgage program has an insurance policy associated so that you are protected if something was to happen and you owed more than the home is worth. Also, you will not be obligated to owing any extra money because of this.
If you are over the age of 62 and have built up home equity over the years, you may be able to utilize a Reverse Mortgage in many different ways.
Reverse Mortgages are a specialty and many other mortgage companies and mortgage lenders are not fully proficient in this mortgage product. We have Reverse Mortgage specialists who are here to help