As you approach retirement, your priorities and lifestyle may begin to shift, especially when it comes to where you live. Perhaps you’re dreaming of relocating to a warmer climate, moving closer to loved ones, or simply downsizing to a home that’s easier to maintain. Whatever your motivation, the idea of a fresh start in a new home can be exciting—but one major question can stand in the way: Can I afford to make this move?
You’ve likely heard of reverse mortgages and how they allow homeowners to convert a portion of their current home’s equity into cash to supplement retirement cash flow. But did you know you can also use a reverse mortgage to purchase a new home?
In this installment of our “Reversing Retirement Challenges” series, we’ll delve into how a Home Equity Conversion Mortgage (HECM) for Purchase can support your move to a new home that better suits your retirement goals, all while keeping your financial future intact.
The Challenge: Affording a New Home in Retirement
As the saying goes, “There’s no place like home.” But as we age, so do our homes. And you might find that your current home no longer aligns with your needs. The spacious house that once accommodated your growing family might now feel more like a burden, with extra rooms and maintenance chores.
While you might have once thought your options were limited to downsizing or moving to assisted living, there’s a new way to think about retirement living. Today’s retirees are rethinking the idea of a perfect home and embracing the concept of rightsizing—finding a place that fits your current needs and desires. But, with the current housing market driving up costs, making this move can seem daunting. How can you afford the home you want without straining your finances or dipping into your retirement savings?
If the thought of taking on new monthly mortgage payments, especially in a higher-interest environment, feels overwhelming, you’re not alone. So, how do you achieve your dream home while keeping your financial future secure?
The Solution: How Home Equity Can Help You “Rightsize”
If you’re thinking about moving to a home that better fits your retirement lifestyle, a HECM for Purchase might be the perfect solution. This unique financing option allows you to buy a new home using a reverse mortgage, giving you more flexibility and financial freedom.
Here’s how it works: With a HECM for Purchase, you make a one-time down payment, usually with proceeds from the sale of your current home, and the reverse mortgage covers the rest. You won’t have to worry about monthly mortgage payments—just stay current with your property taxes, insurance, and home maintenance. This means you have the freedom to use your funds as you wish, without the pressure of monthly mortgage bills.1
What a HECM for Purchase Could do for You:
- Boost Your Cash Flow: Say goodbye to monthly principal and interest payments!1 By keeping more of the proceeds from your home sale, you gain extra cash for investments or personal needs. This means more financial flexibility as you settle into your new place.
- Expand Your Options: Dreaming of a more upscale home or a property in a sought-after location? A HECM for Purchase can help make it a reality. It opens doors to homes that might have seemed out of reach, letting you find a place that really checks off your “wish list” items.
- Align with Your Lifestyle: Whether you’re moving closer to friends or family, finding a community with great amenities, or just looking for a more comfortable and accessible home, a HECM for Purchase helps you choose a home that matches your current needs and future plans.
Securing Your Financial Future:
A HECM for Purchase isn’t just about getting a new home—it’s also about securing your financial well-being:
- Protect Your Savings: You can buy a new home without touching your investment portfolio. Your retirement savings stay intact, ready for future needs and helping you keep your financial footing.
- Cut Down on Initial Costs: Worried about the expenses of moving? A HECM for Purchase can allow Interested Party Contributions to help cover up to 6% of the sale price2 for fees, closing costs, and other expenses, making the upfront costs of buying a new home much more manageable.
- Peace of Mind: With non-recourse protection, you’ll never owe more than your home’s value when it’s sold. If the loan balance is higher than the sale price, neither you nor your heirs will be responsible for the difference, giving you a safety net against market fluctuations.
By choosing a HECM for Purchase, you can transition smoothly to a new home, keep your finances in check, and enjoy the peace of mind that comes with a more secure financial future.
Making the Move
When it comes to “rightsizing” or relocating, affordability doesn’t have to stand in the way of your retirement dreams. A reverse mortgage for purchase can provide the financial flexibility you need to make your next move, all while preserving your savings and improving your cash flow. Whether you’re downsizing to simplify your lifestyle or relocating to a place that feels more like home, a HECM for Purchase can help you get there without the financial stress.
Ready to make your retirement dream home a reality? At Longbridge Financial, we’re here to help! We’ll get to know you, your goals, your home, and your finances as we discuss your options. Contact our knowledgeable team today to explore how a HECM for Purchase can work for you.
Stay tuned for the next blog in our “Reversing Retirement Challenges” series, where we’ll explore how to strategically use home equity to navigate the financial complexities of divorce.
