Use a Reverse Mortgage to Purchase or Refinance a Home – with No Monthly Payment
“After my husband passed away I didn’t need such a big house and my grandchildren were living in nearby Colorado. I wanted to be near them, but on a fixed income I didn’t think I could purchase a home or condo and make the mortgage payments. My loan officer suggested a Reverse Mortgage and I couldn’t be happier!”
Stories like this one abound as Seniors on fixed incomes are finding that the ability to downsize and/or live closer to family are reasons to investigate the use of a Reverse Mortgage for Purchase (Home Equity Conversion Mortgage – HECM for Purchase), a financial tool that can turn the equity in their current home into the purchase of a new home within a single transaction.
Perhaps your home is paid for, or you have only a few years left of making payments, but with rising healthcare costs, or a desire to travel, you could use some extra cash.
- With a Reverse Mortgage there is no monthly mortgage payment
- Loan Proceeds are tax free (always consult your financial advisor.)
- No prepayment penalty
- Credit requirements tailored to Seniors
- Increased discretionary cash
- Remain on title and continue to own the home (property tax and insurance must continue to be paid and the home maintained.)
- Sell the home whenever you wish
- Will the home to your heirs and they can sell it, refinance to keep it, or purchase it for 95% of the appraised value regardless of the amount owed on the Reverse Mortgage
- Never owe more than the value of the home (even if you live to be 100!)
A Reverse Mortgage is a government insured loan that allows homeowners who are 62 years or older to convert the substantial equity in their home into non-taxable income.
The amount of money that will be available is determined by the appraised value of the home, the amount of equity in the home, and the age of the homeowners. If you would like to downsize, and sell your current home, a portion of the proceeds may be used as your down payment on the new property, and the Reverse Mortgage will allow you to retain substantial non-taxable funds for savings, investment, travel, healthcare, or any other use.
While you will not have a monthly mortgage payment with a Reverse Mortgage for Purchase or a Reverse Mortgage to help you stay in your current home, in either case you must maintain the property by keeping up with repairs, paying for insurance and paying your property taxes. As of April 28, 2015, FHA (Federal Housing Administration) began what they call a Financial Assessment to be sure that you can meet these obligations, a natural part of the process to obtain a Reverse Mortgage.
With a Reverse Mortgage there is no loan repayment until the homeowner(s) no longer live in the home. You will never owe more than the home is worth because FHA will pay the difference if the loan balance is more than the value of the home when it is time to repay the Reverse Mortgage. Since you retain ownership of the home, you may include it in your will. Your heirs will have the choice of keeping the property or selling.
One of the requirements for a Reverse Mortgage is that the home owner(s) attend a counseling session with an approved non-profit organization to examine the pros and cons.
In the Denver Metro there are many such organizations in various areas of the city with whom you may make an appointment. There are also agencies that will do the counseling over the phone. They will explain such things as costs, tax implications, payment options, benefits and drawbacks. A certificate will be issued to you upon completion. You will be asked to provide it to your Reverse Mortgage Specialist to be submitted with the other loan documents should you decide a Reverse Mortgage is right for you.
Contact your Reverse Mortgage Specialist for additional information and a proposal created just for you.
Jim is the Branch Manager and Reverse Mortgage Specialist at Security First Financial Mortgage in Centennial, CO. As a Reverse Mortgage professional he handles the entire loan process by offering a no-commitment client consultation, assistance with application completion, help scheduling an appraisal to assess the value of your property, and closing services. By having oversight and control in-house, Jim can ensure a smooth and worry-free Reverse Mortgage process for you, the client. Jim consistently achieves the highest customer satisfaction rating in the Denver Metro market.
Direct: 303-875-5994 | JimDoyle@SecurityFF.com | NMLS# 335659