If you are 62 or older and own your own home ask yourself this question: Am I living in the home I have always dreamed of? If you can say YES to this question, then terrific. Read our next blog on the Reverse Mortgage Line of Credit. If no… then you are in for a pleasant surprise! You CAN live in the home of your dreams. It is possible with a Home Equity Conversion Mortgage for Purchase Loan (H4P). If you qualify, in ONE transaction you can use the equity in your existing home to purchase the home of your dreams. Let’s dream for a moment…
*Most, but not all, reverse mortgages today are federally insured through the Federal Housing Administration’s Home Equity Conversion Mortgage (HECM) Program. This advertisement talks about HECM loans only.
What if you could live on the golf course in that cute little (or big) house in the corner? You could just jump into your golf cart, go up to the club for breakfast and get 18 holes in before the heat of the day. Maybe your dream is to live closer to family and friends. You could afford to purchase a home in another state or pretty much wherever you want to. The next question to ask yourself is: How does a Home Equity Conversion Mortgage for Purchase work?
Harlan Accola addresses the H4P in his book “Home Equity and Reverse Mortgages: The Cinderella of the Baby Boomer Retirement”. He describes the different ways the proceeds can be taken. One of these ways is the H4P. This combines a reverse mortgage loan with the equity from the sale of your previous home – or from other savings and assets – to buy your next primary home in a single transaction. Regardless of what happens to your home’s value or how long you live in the home, you only make one down payment* towards the purchase. However, you must continue to pay taxes and insurance (and homeowner association dues if applicable), and maintain the home. With any additional equity after paying the down payment, you can use that for upgrading your new home, go on a vacation, or any other expenses that you might have.
The next question to ask yourself is: “How do I qualify for a Home Equity Conversion Mortgage for Purchase Loan? Here are the basics:
One borrower must be 62 years or older
Purchased home is required to be your primary residence
New property must be: single-family home, 2-4 unit dwelling or FHA approved condo
Must receive reverse mortgage counseling from a HUD approved counseling agency
You must have an adequate down payment for your new home or a gift from a family member
If you meet these basic requirements and want to know more, I am here for you. I will come out to your house, you can make an appointment to come into my office, attend one of my workshops or we can meet for coffee… whatever works best for you. Let’s start the conversation and see where it leads...hopefully to the home of your dreams.
*The required down payment on your new home is determined on a number of factors, including your age or eligible non-borrowing spouse’s age, if applicable; current interest rates; and the lesser of the home’s appraised value or purchase price.
Joan Qvigstad, Senior Reverse Mortgage Planner
Copyright©2018 Fairway Independent Mortgage Corporation (“Fairway”) NMLS#2289. 4750 S. Biltmore Lane, Madison, WI 53718, 1-877-699-0353 . All rights reserved. Fairway is not affiliated with any government agencies. These materials are not from HUD or FHA and were not approved by HUD or a government agency. Reverse mortgage borrowers are required to obtain an eligibility certificate by receiving counseling sessions with a HUD-approved agency. The youngest borrower must be at least 62 years old. Monthly reverse mortgage advances may affect eligibility for some other programs. This is not an offer to enter into an agreement. Not all customers will qualify. Information, rates and programs are subject to change without notice. All products are subject to credit and property approval. Other restrictions and limitations may apply.