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Can You Use a Reverse Mortgage to Buy Your Next Home? Yes, and Here’s How

September 2, 2016 by support

Can You Use a Reverse Mortgage to Buy Your Next Home? Yes, and Here's HowMost people who have been on the market for a home are familiar with what the term ‘mortgage’ means, but many have not heard of a reverse mortgage and aren’t aware of how this product can benefit them. If you’re nearing retirement and are contemplating a new home or even relocation to another community, here are the details on a reverse mortgage and how this option may benefit you.

What Is A Reverse Mortgage?

While many homeowners may not have the net worth to be able to buy another home without selling their current one, a reverse mortgage enables the buyer to borrow money against the value of their home. Created in 2009 as the Home Equity Conversion Mortgage for Purchase (HECM), this type of mortgage can enable those older than 62 to relocate to a new house or move closer to their family without having to sacrifice the money they’ve saved or their fixed monthly income.

What Are The Requirements?

Beyond the minimum age requirement of 62 years of age, those who would like to utilize a reverse mortgage must either own the current property they are living in or have a high amount of equity in the property. They must be able to pay all of the costs associated with ownership of the home and the property they are purchasing must be able to pass the standards held by the Federal House Administration (FHA). In addition, applicants will have to go through a financial assessment to ensure they can make insurance and property tax payments.

The Benefits And Drawbacks Of Reverse Mortgages

A reverse mortgage can be a great benefit in that it enables those who are in their senior years to purchase a new home without having to utilize a portion of their fixed monthly income. However, because a reverse mortgage includes this benefit, it also comes in tandem with a higher loan balance and this higher balance means that interest will accrue more quickly. Dependent on this amount, this can actually diminish the equity in the home.

While the opportunity for a reverse mortgage has been around for a number of years, this alternative for purchasing a home has not been utilized by many homeowners since its inception in 2009. If you’re approaching your senior years and are considering the benefits of purchasing a new home, you may want to contact your local mortgage professional for more information.

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Filed Under: Home Mortgage Tips Tagged With: Home Mortgage Tips, Mortgage, Reverse Mortgages

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This licensee is performing acts for which a real estate license is required. C2 Financial Corporation is licensed by the California Bureau of Real Estate, Broker #01821025; NMLS #135622. Loan approval is not guaranteed and is subject to lender review of information.

Loan is only approved when lender has issued approval in writing. Specified rates may not be available for all borrowers. Rate subject to change with market conditions. C2 Financial Corporation is an Equal Opportunity Mortgage Broker/Lender.

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The services referred to herein are not available to persons located outside the state of California.
C2 Financial Corporation is approved to originate VA and FHA loans, and has the ability to broker such loans to VA and FHA approved lenders. C2 Financial Corporation is not acting on behalf of or at the direction of HUD/FHA or the VA.

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