Category: Reverse Mortgage for Purchase

Only 3% of Seniors Use a HECM Reverse Mortgage to Purchase a Home – But Why?

reverse mortgage advisor connecticutWhy is it that only 2-3% of older Americans use the HECM Reverse Mortgage for Purchase option to buy a home?  Recent studies show that even with the option available to them, they still seek traditional funding or opt to pay cash.  Why is that?  Well, surveys have shown there are three main reasons:

1.) No one told them they could use a HECM reverse mortgage as a purchasing tool.  Unfortunately this happens far too often.  Real estate agents and lenders are either not aware of this option or are not educated enough to suggest it.  If you’re a senior considering purchasing a home, be sure to ask about using a reverse mortgage.  If you aren’t given proper information, contact a reverse mortgage expert such as myself.

2.) Real estate agents do not have enough knowledge to adequately educate the potential buyer about this option.  If you as a potential buyer find yourself in this situation, ask who you could talk to to learn more or seek out an expert yourself.

3.) The third reason seniors opt for traditional financing is the down payment required to use a reverse mortgage.  The down payment amount varies based on the price of the home, the age of the borrower, and current interest rates.

In order to apply for a HECM Reverse Mortgage for Purchase loan, you must be age 62 or older (each borrower on title must meet this criteria, although others residing in home do not), the home you are purchasing must be your new primary residence, you must have your “required investment” (down payment) from a HUD allowable source.

Sara Cornwall is a local Reverse Mortgage Advisor serving the entire state of Connecticut. Contact Sara and learn if reverse mortgage is right for you.

Should You Pay Off A Traditional Mortgage With A HECM Reverse Mortgage?

reverse mortgage advisor connecticutA recently released university report by the Michigan Retirement Research Center and funded by the Social Security Administration showed that 55% of those utilizing a HECM reverse mortgage are using some of the proceeds to pay off a traditional mortgage.

So, when is this a good strategy?

1.) They’re living in a house they can’t afford

When many older adults reach retirement, they have to figure out out how to live on a fixed income and how to make their other retirement assets last for what is often decades.  Tapping into a HECM reverse mortgage will both eliminate the weight of the mortgage payment, and often even allow extra funds to be used throughout the remainder of their lives.

2.) They want to purchase a different home

It’s not uncommon for retirees to purchase a home in retirement.  But few know they can do this with a HECM reverse mortgage instead of a conventional one. This allows buyers to either preserve assets and income, or purchase a home that would typically be out of their price range.  Click here to learn more about the HECM Reverse Mortgage for Purchase program.

3.)  They don’t want to interrupt performing assets

For those with retirement investments that are doing well, drawing from these to make mortgage payments could be a bad move.  Using a HECM reverse mortgage to eliminate mortgage payments can be a win-win in the long run.

HECM reverse mortgages use the equity in your home to allow access to cash through monthly payments, a lump sum, or a line of credit while living mortgage payment free.  The borrower and the home must meet certain qualifications, such as age (62 or older), and HUD’s  home eligibility requirements, and they must also continue to pay and maintain certain responsibilities such as property taxes and homeowners insurance.

Sara Cornwall is a local Reverse Mortgage Advisor serving the entire state of Connecticut. Contact Sara and learn if reverse mortgage is right for you.

Does My Home Qualify for a Reverse Mortgage?

reverse mortgage advisor connecticutReverse Mortgages are a specialized loan available to homeowners 62 and over.  This creative resource is used by a wide demographic – from those looking to supplement a fixed income, to the more affluent in need of protection for retirement assets, and even those wanting to purchase a home in retirement.  But there are some requirements when it comes to the actual home…

Which types of homes are included? 

According the HUD’s Federal Housing Administration, in Connecticut the home must be a single family home, or a 2-4 unit home with one unit occupied by the borrower. Some condominiums and manufactured homes that are approved by HUD also meet FHA requirements.

In the case of a Reverse Mortgage for Purchase, borrowers can use a reverse mortgage to purchase a single family home, or 2-4 unit home with completed construction that has received a certificate of occupancy.

Are there reasons my home may not qualify?

A home with very little equity may not qualify, although homes with paid down existing mortgages often times do and the reverse mortgage can eliminate the mortgage payment.

In addition, homes must be maintained with general upkeep and be current on property taxes and other expenses relevant to the home.

A second home or vacation home may not qualify.  The borrower must be living (or plan to live) in the home.

Bottom line

The funds from a reverse mortgage can be accessed via a lump sum, line of credit, monthly installments, or to purchase a home. If you have questions let a reputable reverse mortgage advisor guide you in the many scenarios that are possible and the two of you can think creatively about your needs and desires.

Sara Cornwall is a local Reverse Mortgage Advisor serving the entire state of Connecticut. Contact Sara and learn if reverse mortgage is right for you.

What Are Reverse Mortgage Borrowers Responsible For?

reverse mortgage advisor connecticutThe HECM Reverse Mortgage program in Connecticut continues to help thousands of retirees create the life of their dreams.  Homeowners, age 62 and over, are eligible for this type of loan.  A huge advantage is the borrowers will live mortgage payment FREE, but they will still have some responsibilities, including a small amount of financial obligations.

Here are the four main commitments borrowers of a reverse mortgage will continue to be required to take care of:

Homeowners Insurance

A reverse mortgage is like other conventional loans requiring the holder to purchase and maintain homeowners insurance, but unlike a conventional loan, this is not part of the loan itself and must be maintained by the homeowner as a separate entity. 

Property Tax

This too is the same as with a conventional loan. The reverse mortgage homeowner will need to pay the property tax. Depending on your financial need, assistance may be available to help pay or defer property taxes.  Your reverse mortgage advisor and your local human services office would have more information about such assistance.

Home Maintenance

Your home remains in your possession, so the maintenance of your home remains your responsibility.  Any applicable HOA fees also remain the responsibility of the borrower.

Utilities

All utilities, such as electricity, gas, water, and trash will remain the borrowers responsibility.

Reverse mortgage is an individualized, specialized loan for those 62 and older that allows older Americans to tap into the equity of their home while living mortgage and loan payment free.  The funds can be accessed via a lump sum, line of credit, monthly installments, or even to purchase a home. If you are planning ahead let your advisor guide you to best suit your needs and desires.

Sara Cornwall is a local Reverse Mortgage Advisor serving the entire state of Connecticut. Contact Sara and learn if reverse mortgage is right for you.