Penny H. Phillips NMLS #204553
Reverse Mortgages, or Home Equity Conversion Mortgages, are one of the most misunderstood loan products in existence today.
We have been helping seniors with these for many years, and will be happy to sit down with you and explain how they work, what your options are, and answer any questions.
Then, if you are ready, we will guide you every step of the way.
Whether you would like to eliminate a mortgage payment or credit card debt, or maybe just add to your rainy day fund to help cover unexpected expenses.
A Home Equity Conversion Mortgage (HECM) for Purchase is a reverse mortgage that allows seniors, age 62 or older, to purchase a new principal residence using loan proceeds from the reverse mortgage.
Down payment amount • HECM for Purchase: Required down payment between approximately 29% and 63% of the purchase price, depending on buyer’s age or Eligible Non-Borrowing Spouse's age, if applicable. (This range assumes closing costs will be financed.) The rest of the funds for purchase come from the HECM loan. This allows the buyers to keep more assets to use as they wish, as compared to paying all cash, while still having the flexibility of no required monthly mortgage payments.
It also greatly increases the buyers BUYING POWER, since he is not having to use all cash to purchase a home.
For senior homeowners who obtained a reverse mortgage several years ago, now they are older, and their house has gained value creating additional equity for them to tap into.
How Are Loan Amounts Calculated?
The buyer's minimum required down payment generally works out to be about 29% to 63% of the sales Price. This calculation is determined by the Department of Housing and Urban Development (HUD). These are age-based loans that allow older borrowers to qualify for more in loan proceeds (see below).
AGE 62 Purchase Price $200,000 Down Payment Required* $127,507
AGE 67 Purchase Price $200,000 Down Payment Required* $120,507
AGE 71 Purchase Price $200,000 Down Payment Required* $116507
AGE 75 Purchase Price $200,000 Down Payment Required* $111,307
As you can see, the older the borrower, the greater percentage of the purchase price they qualify for. In the example above, a 67 year old borrower would put down $120,507 on a $200,000 home, and would have no Monthly Mortgage Payment. He is only expected to keep his insurance and taxes current , and keep the house in good repair, which he would anyway.
HECM for purchase can be used on Loan Amounts up to $679,650. If you would like to see how much you would qualify for, just give us call. We would be happy to show you more about how this great program works.
* Example shown is for illustrative purposes only. Actual down payment amounts vary based on interest rate, borrower age and other factors. This range assumes closing costs will be financed into the loan.
We can show seniors how to use Reverse Mortgages to both save money and expand your buying power on a new home purchase.
22394 Miflin Road, Suite 201A, Foley, AL 36535
Monday - Friday: 9am - 5pm
Saturday: By appointment