Are you interested in learning more about a reverse mortgage purchase or getting started with the process? At Standard Lenders, we can provide you with exceptional care and personalized advice to guide you through the process of how to purchase a home with a reverse mortgage in a way that works with your circumstances. If you want to purchase a home with a reverse mortgage, let us help you.
Purchasing a home with a reverse mortgage is a simple process, to qualify, you simple need to be age 62 or over and have enough savings to pay the necessary down payment on the home. The down payment requirement with a Reverse Mortgage for purchase will be dependent on your age and the value of the home you’re trying to purchase. Once completed you can move in and immediately be in a Reverse Mortgage. Like other reverse mortgages, reverse mortgages for purchase loans do not require monthly payments, but you will still need to meet the other regular requirements for a reverse mortgage*.
*Borrower is still responsible to pay property taxes, homeowner’s insurance, and home maintenance costs.
Not every home is eligible to be purchased with reverse mortgages, and not every potential purchaser will qualify for this type of loan program. Some co-op units and manufactured homes have various reasons for ineligibility. Borrowers have to commit to living in the home as a principal residence and keep the home in good condition while paying property taxes and other related expenses on time or else forfeit eligibility.
If you’re unsure whether your potential purchase with a reverse mortgage falls under one of these exceptions, Standard Lenders is here to help you make a plan to fit your individual circumstances.
An important aspect of how to purchase with reverse mortgage money concerns the requirements for down payments. These requirements are set by the United States Department of Housing and Urban Development (HUD) rather than coming from the state of California or from Standard Lenders, but we can help you to understand them so you know how you can best qualify.
Most adults have heard of reverse mortgages, but many are unsure of what these loans mean and how they work.What Is a Reverse Mortgage?In a nutshell, these loans are outstanding loans intended for people over the age of 62 to have access to equity in their homes.
This type of loan is especially desirable to people who want, or need, to supplement their pension funds.How Does A Reverse Mortgage Purchase Loan Work?A reverse mortgage purchase loan works by first using part of the home equity to repay an existing residential mortgage - that is, if it still has a mortgage.The homeowner is not required to pay the loan monthly for the reverse mortgage, as the loan balance falls due until the final borrower leaves the house, passes away, failure to pays taxes or insurance, or neglects house maintenance.Although they are not required to make month-to-month payments, doing so could decrease the regular monthly interest or prevent it from accruing entirely.
If they decide not to make a month-to-month payment on the loan, interest for that month will get added to the total loan balance.After paying off the existing mortgage, the reverse mortgage purchase loan lender will pay any proceeds that are left from the new loan.
The homeowner gets to choose how to receive the funds.Types of reverse mortgage purchase loans: Home Equity Conversion Mortgages (HECMs)HECMs are insured by the federal government and make up more than 90% of all reverse mortgages purchase loans.Eligible residences include properties with one to four units, as well as approved manufactured homes, apartments, and co-ops.Proprietary loans: Private institutions fund proprietary loansSingle-purpose loans: Non-profit and other organizations fund single-purpose loans.
As the name suggests, single-purpose loans must be used for a specific purpose, which the provider typically dictates.
Currently, loans that are subject to proprietary or single-purpose loans are rarely given to borrowers.Who Is Eligible For A Reverse Mortgage Purchase Loan?To be eligible for a reverse mortgage purchase loan, the homeowner must meet at least the following criteria:Must be 62 years of age or older.Must have adequate equity in the home – about 50%, but the amount required varies depending on the lender.Must participate in a counseling session from a Department of Housing and Urban Development-approved counselor.Must go through a financial assessment.In addition to these requirements, the house also needs to qualify for the loan.
